The Effects of Demand Randomness in Newsvendor Model

Zhi Bing Lin

doi:10.4028/www.scientific.net/AMM.397-400.2595

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HomeApplied Mechanics and MaterialsApplied Mechanics and Materials Vols. 397-400The Effects of Demand Randomness in Newsvendor...

The Effects of Demand Randomness in Newsvendor Model

Abstract:

In this paper, we consider a newsvendor model while its demand randomness is changeable. We analyze how the demand randomness affects the decision variables and objective functions in two difference situations: (1) the retail price is fixed;(2) the retail price is changeable. In first situation, we characterize the optimal order quantity, expected profit and variance of profit based on the benchmark model. In second situation, we show that the expected profit is joint concave function with respect to order quantity and retail price, also give the first order conditions. Finally, we use number analysis to show the effects of demand randomness on optimal retail price and order quantity

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Periodical:

Applied Mechanics and Materials (Volumes 397-400)

Pages:

2595-2600

DOI:

https://doi.org/10.4028/www.scientific.net/AMM.397-400.2595

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Online since:

September 2013

Authors:

Zhi Bing Lin

Keywords:

Demand Randomness, Expected Profit, Newsvendor Model

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