Advertisement

Optimal Order Quantity for the Mean-Variance Newsvendor Problem with Stockout

  • Akram El-TannirEmail author
Conference paper
  • 15 Downloads
Part of the Lecture Notes in Management and Industrial Engineering book series (LNMIE)

Abstract

This paper extends the formula that derives the optimal order quantity for the risk-neutral newsvendor under stockout. Its objective is to maximize the mean-variance risk-averse profit utility function under the general demand probability distribution. The obtained formula is applied for the cases of the Uniform, Normal, and Exponential distributions. The obtained results confirmed earlier findings that the optimal order quantity for the risk-averse newsvendor problem with stockout using the mean-variance utility can either be less than or greater than the optimal quantity of the risk-neutral case.

Keywords

Supply chain Newsvendor problem Mean-variance utility Risk-averse 

References

  1. Berman O, Schnabel J (1986) Mean-variance analysis and the single-period inventory problem. Int J Syst Sci 17:1145–1151MathSciNetCrossRefGoogle Scholar
  2. Choi T, Li D, Yan H (2008) Mean-variance analysis for the newsvendor problem. IEEE Trans Syst Man Cybern Part A Syst Hum 38:1169–1180CrossRefGoogle Scholar
  3. Choi T, Chiu C (2012) Mean-downside-risk and mean-variance newsvendor models: implications for sustainable fashion retailing. Int J Prod Econ 135:552–560CrossRefGoogle Scholar
  4. Herrero J, Baykal-Gürsoy B, Jašskiewics A (2015) A price-setting newsvendor problem under mean-variance criteria. Eur J Oper Res 247:575–587MathSciNetCrossRefGoogle Scholar
  5. Markowitz H (1959) Portfolio selection: efficient diversification of investments. Wiley, New YorkGoogle Scholar
  6. Tekin M, Özekici S (2015) Mean-variance newsvendor model with random supply and financial hedging. IIE Trans 47:910–928CrossRefGoogle Scholar
  7. Wu J, Li J, Wang S, Cheng T (2009) Mean-variance analysis of the newsvendor model with stockout cost. Omega 37:724–730CrossRefGoogle Scholar

Copyright information

© Springer Nature Switzerland AG 2020

Authors and Affiliations

  1. 1.Department of Industrial Engineering and Engineering Management, Faculty of EngineeringBeirut Arab UniversityBeirutLebanon

Personalised recommendations