A multi-objective two-echelon newsvendor problem with limited budget and capacity

Document Type : Article

Authors

1 Department of Industrial Engineering, Faculty of Industrial and Mechanical Engineering, Qazvin Branch, Islamic Azad University, Qazvin, P.O. Box 34185-1416, Iran

2 Department of Industrial Engineering, Faculty of Engineering, Kharazmi University, Tehran, Iran

Abstract

In this paper, two-echelon newsvendor problem is considered. Many real-life situations like fashion, food industries, and healthcare services match newsvendor problem. Our problem is determining levels of inventory in order to optimize the profit and service level in selling a product. This product is made up of several raw materials. Only the distribution of demand is known, and the hot season of selling the product is just a short period and after that, the price of the product drops dramatically. The storage space and initial budget are limited. We modeled and solved the problem as an unconstrained nonlinear optimization problem using two nonlinear techniques, the sequential unconstrained minimization technique (SUMT) and steepest descent (SD).

Keywords

References

References:
1. Qin, Y., Wang, R., Vakharia, A., et al. "The newsvendor problem: review and directions for future research", European Journal of Operational Research,213(2), pp. 361-374 (2011).
2. Sariyer, G. "Sizing capacity levels in emergency medical services dispatch centers: Using the newsvendor approach", The American Journal of Emergency Medicine, 36(5), pp. 804-815 (2018).
3. Olivares, M., Terwiesch, C., and Cassorla, L. "Structural estimation of the newsvendor model: an application to reserving operating room time", Management Science, 54(1), pp. 41-55 (2008).
4. Wachtel, R. and Dexter, F. "Review of behavioral operations experimental studies of newsvendor problems for operating room management", Anesthesia Analgesia, 110(6), pp. 1698-1710 (2010).
5. Abedini, A., Li, W., and Ye, H. "Stochastic bilevel optimization models for efficient operating room planning", Procedia Manufacturing, 26, pp. 58-69 (2018).
6. Khouja, B. "The single period (news-vendor) problem: literature review and suggestions", Omega, 27(5), pp. 537-553 (1999).
7. Sundar, D., Ravikumar, K., and Mahajan, S. "The distribution free newsboy problem with partial information", Int. J. Operational Research, 33(4), pp. 481- 496 (2018).
8. Subrata, M. "Newsvendor problem with clearance pricing", European Journal of Operational Research, 268, pp. 193-202 (2018).
9. Sainathan, A. and Groenevelt, H. "Vendor managed inventory contracts-coordinating the supply chain while looking from the vendor's perspective", European Journal of Operational Research, 272, pp. 249-260 (2019).
10. Tekin, M. and Ozekici S. "Mean-variance newsvendor model with random supply and financial hedging", IE Transactions, 47(9), pp. 910-928 (2015).
11. Pal, B., Sankar Sana, S., and Chaudhuri, K. "A distribution-free newsvendor problem with nonlinear holding cost", International Journal of Systems Science, 46(7), pp. 1269-1277 (2015).
12. Shi, Y., Alwan, L., Tang, C., et al. "A newsvendor model with auto correlated demand under a timeconsistent dynamic CVaR measure", IISE Transactions, 51(6), pp. 653-671 (2019).
13. Wang, T., Atasu, A., and Kurtulus, M. "A multi ordering newsvendor model with dynamic forecast evolution", Manufacturing & Service Operations Management, 14(3), pp. 355-484 (2012).
14. Abrudan, L.C., Matei, M.C., and Abrudan, M.M. "Running a business through a sharing responsibilities (and profits) strategy", Proceedings of the 12th International Management Conference, 12(1), pp. 28- 38 (2018).
15. Bieniek, M. "Goal setting in the newsvendor problem with uniformly distributed demand", Multiple Criteria Decision Making, 13, pp. 91-102 (2018).
16. Kim, G., Wu, K., and Huang, E. "Optimal inventory control in a multi-period newsvendor problem with non-stationary demand", Advanced Engineering Informatics, 29(1), pp. 139-145 (2015).
17. Alwan, L.C., Xu, M., Yao, D., et al. "The dynamic newsvendor model with correlated demand", Decision Sciences, 47(1), pp. 11-30 (2016).
18. Alwan, L.C. and WeiB, C.H. "INAR implementation of newsvendor model for serially dependent demand counts", International Journal of Production Research,55(4), pp. 1085-1099 (2017).
19. Xu, X., Meng, Z., Ji, P., et al. "On the newsvendor model with conditional Value-at-Risk of opportunity loss", International Journal of Production Research, 54(8), pp. 2449-2458 (2016).
20. Khouja, M., Liu, X., and Zhou, J. "To sell or not to sell to an o -price retailer in the presence of strategic consumers", Omega, 90, 102002 (2020).
21. Dai, J. and Meng, W. "A risk-averse newsvendor model under marketing-dependency and price-dependency", International Journal of Production Economics, 160, pp. 220-229 (2015).
22. Pasandideh, S.H., Akhavan Niyaki, S.T., and Rashidi, R. "A tow-echelon single-period inventory control problem under budget constraint", International Journal of Advanced Manufacturing Technology, 56(9-12), pp. 1205-1214 (2011).
23. Guler, K., Korpeouglu, E., and Sen, A. "Newsvendor competition under asymmetric cost information", European Journal of Operational Research, 271(2), pp.561-576 (2018).
24. Mohammadivojdan, R. and Geunes, J. "The newsvendor problem with capacitated suppliers and quantity discounts", European Journal of Operational Research,271, pp. 109-119 (2018).
25. Zhang, Y., Yang, X., and Li, B. "Distribution-free solutions to the extended multi-period newsboy problem", AIMS, 13(2), pp. 633-647 (2017).
26. Adhikary, K., Roy, J., and Kar, S. "A distributionfree newsboy problem with fuzzy random demand", International Journal of Management Science and Engineering Management, 13(3), pp. 200-208 (2018).
27. Watt, R. and Vazquez, F. "An analysis of insurance in the newsboy problem", European Journal of Operational Research, 259(3), pp. 1064-1072 (2017).
28. Ghiami, Y. and Williams, T. "A two-echelon production-inventory model for deteriorating items with multiple buyers", International Journal of Production Economics, 159, pp. 233-240 (2015).
29. Boukari, D. and Fiacco, V. "Survey of penalty, exactpenalty and multiplier methods from 1968 to 1993", Optimization: A Journal of Mathematical Programming and Operations Research, 32(4), pp. 301-334 (1995).
30. Bazara, M., Sherali, H., and Shetty, C., Nonlinear Programming Theory and Algorithms, John Wiley Sons, Atlanta, Georgia (1979).
31. Peressini, A., Sullivan, F., and Uhi, J., The Mathematics of Nonlinear Programming, Undergraduate Texts in Mathematics, Springer-Verlag (1988).
32. Petrova, S. and Solov'ev, A. "The origin of the method of steepest descent", Historia Mathematica, 24(4), pp. 361-375 (1997).
33. Gunantara, N. "A review of multi-objective optimization: Methods and its applications", Cogent Engineering, 5, pp. 1-16 (2018).
34. Marler, R. and Arora, J. "Survey of multi-objective optimization methods for engineering", Struct. Multidisc. Optim., 26(6), pp. 369-395 (2004).
35. Branke, J., Deb, K., Miettinen, K., et al., Multiobjective Optimization: Interactive and Evolutionary Approaches, Springer Science & Business Media (2008).
Scientia Iranica
Volume 29, Issue 1
Transactions on Industrial Engineering (E)
January and February 2022
Pages 275-289

Files

Share

How to cite

Statistics