The newsvendor problem has numerous applications for decision making in manufacturing and service industries as well as decision making by individuals. It occurs whenever the amount needed of a given resource is random, a decision must be made regarding the amount of the resource to have available prior to finding out how much is needed, and the economic consequences of having “too much” and “too little” are known.
This is a preview of subscription content, log in via an institution.
Buying options
Tax calculation will be finalised at checkout
Purchases are for personal use only
Learn about institutional subscriptionsReferences
Arrow, K., T. Harris, J. Marschak (1951) “Optimal Inventory Policy,” Econometrica 19 250–272.
Arrow, K., S. Karlin, H. Scarf (1958) Studies in the Mathematical Theory of Inventory and Production, Stanford University Press, Stanford.
Bellman, R., I. Glicksberg, O. Gross (1955) “On the Optimal Inventory Equation,” Management Science 2 83–104.
Denardo, E. (2002) The Science of Decision Making: A Problem-Based Approach Using Excel, John Wiley, New York.
Dvoretzky, A., J. Kiefer, J. Wolfowitz (1952) “The Inventory Problem: I. Case of Known Distributions of Demand,” Econometrica 20 187–222.
Edgeworth, F. (1888) “The Mathematical Theory of Banking,” Journal of Royal Statististical Society 113–127.
Gallego, G. (1997) “Uncertain Demand at Salvage Value,” Notes for IEOR 4000: Production Management, Columbia University, New York.
Harrison, T., H. Lee, J. Neale 2003 The Practice of SupplyChain Management: Where Theory and Application Converge, Kluwer Academic Publishers.
Karlin, S. (1958) “One Stage Inventory Models with Uncertainty,” in Arrow, K., S. Karlin, H. Scarf (eds) Studies in the Mathematical Theory of Inventory and Production, Stanford University Press, Stanford, 109–134.
Manne, A. (1961) “Capacity Expansion and Probabilistic Growth,” Econometrica 29 632–649.
Morse, P., G. Kimball (1951) Methods of Operations Research, Technology Press of MIT, Cambridge.
Porteus, E. (2002) Foundations of Stochastic Inventory Theory, Stanford University Press, Stanford.
Shogan, A. (1988) Management Science, Prentice-Hall, Englewood Cliffs.
Sobel, M. (1981) “Myopic Solutions of Markovian Decision Processes and Stochastic Games,” Operations Research 26 995–1009.
Talluri, K., G. van Ryzin (2004) The Theory and Practice of Revenue Management, Kluwer Academic Publishers.
Van Mieghem, J. (2003) “Capacity Management, Investment, and Hedging: Review and Recent Developments,” Manufacturing & Service Operations Management 5 269–302.
Veinott, A., Jr. (1965) “Optimal Policy for a Multi-product, Dynamic, Nonstationary, Inventory Problem,” Management Science 12 206–222.
Wagner, H. (1975) Principles of Operations Research, Prentice-Hall, Englewood Cliffs.
Whitin, S. (1953) The Theory of Inventory Management, Princeton University Press, Princeton.
Zipkin, P. (2000) Foundations of Inventory Management, McGraw-Hill/Irwin, New York.
Acknowledgments
The author wishes to thank Matthew Sobel for his comments and suggestions leading to a much improved document and Linda Bethel for helping convert the author's LaTex document into Word.
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2008 Springer Science+Business Media, LLC
About this chapter
Cite this chapter
Porteus, E.L. (2008). The Newsvendor Problem. In: Chhajed, D., Lowe, T.J. (eds) Building Intuition. International Series in Operations Research & Management Science, vol 115. Springer, Boston, MA. https://doi.org/10.1007/978-0-387-73699-0_7
Download citation
DOI: https://doi.org/10.1007/978-0-387-73699-0_7
Publisher Name: Springer, Boston, MA
Print ISBN: 978-0-387-73698-3
Online ISBN: 978-0-387-73699-0
eBook Packages: Business and EconomicsBusiness and Management (R0)