Hostname: page-component-78c5997874-94fs2 Total loading time: 0 Render date: 2024-11-13T06:57:46.719Z Has data issue: false hasContentIssue false
  • English
  • Français

Newsboy Problem: Viability of Optimal Initial Selling Price andOrdering Policies in the Presence of Exogenous Price Decline and Random LeadTime

Published online by Cambridge University Press:  29 November 2013

Ningombam Sanjib Meitei  and
Snigdha Banerjee
Ningombam Sanjib Meitei
Affiliation:
School of Statistics, Devi Ahilya University, Vigyan Bhawan, Khandwa Road, Indore-452001, India.. sanjibmeiteicha@rediffmail.com; bans1@rediffmail.com
Snigdha Banerjee
Affiliation:
School of Statistics, Devi Ahilya University, Vigyan Bhawan, Khandwa Road, Indore-452001, India.. sanjibmeiteicha@rediffmail.com; bans1@rediffmail.com
Get access

Abstract

Analysis of empirical sales data lead us to consider newsboy model for four practicalmarket conditions arising from the presence/absence of stochastic lead time and exogenouslinear temporal decline in selling price when distribution of the stochastic demanddepends upon initial selling price. Viability of the solutions is discussed for threestrategies of obtaining optimal initial selling price and/or ordering quantity. Numericalstudies are conducted to assess the effects of lead time and price decline.

Keywords

Stochastic lead-timeexogenous price declinepricinginitial selling priceviable policies
Type
Research Article
Information
RAIRO - Operations Research , Volume 47 , Issue 4 , September 2013 , pp. 371 - 394
Copyright
© EDP Sciences, ROADEF, SMAI 2013

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Arrow, K., Harris, T. and Marschak, J., Optim. Inventory Policy. Econometrica 19 (1951) 250–272. Google Scholar
Within, T.M., Inventory control and price theory. Mgmt. Sci. 2 (1955) 61–68. Google Scholar
Lau, A. and Lau, H.S., The newsboy problem with price dependent demand distribution. IIE Trans. 20 (1988) 168–175. Google Scholar
Khouja, M.J., Optimal ordering, discounting and pricing in the single period problem. Itnl J. Prod.Eco. 66 (2000) 201–216. Google Scholar
Khouja, M., The newsboy problem under progressive multiple discounts. Eur. J. Oper. Res. 84 (1995) 458–466. Google Scholar
Khouja, M., The single-period (news-vendor) problem: literature review and suggestions for future research. Omega 27 (1999) 537–553. Google Scholar
Elmaghraby, W. and Keskinocak, P., Dynamic Pricing in the Presence of Inventory Considerations: Research Overview, Current Practices, and Future Directions, Mgmt. Sci. 49 (2003) 1287–1309. Google Scholar
Banerjee, S. and Meitei, N.S., Effect of declining selling price: profit analysis for a single period inventory model with stochastic demand and lead time. J. Oper. Res. Soc. 61 (2010) 696–704. Google Scholar
Polatoglu, L.H., Optimal order quantity and pricing decisions in single-period inventory systems. Intl. J. Prod. Eco. 23 (1991) 175–185. Google Scholar
Petruzzi, N.C. and Dada, M., Pricing and the newsvendor problem: a review with extensions. Oper. Res. 47 (1999) 183–94. Google Scholar
Yang, S., Shi, C.V. and Zhao, X., Optimal ordering and pricing decisions for a target oriented newsvendor. Omega 39 (2011) 110–115. Google Scholar
Bitran, G.S. and Mondschein, V., Periodic pricing of seasonal products in retailing. Mgmt. Sci. 43 (1997) 64–79. Google Scholar
The New York times, 5 February 1922, http://query.nytimes.com/mem/archive-free/pdf?˙r=1&res=9D05EED71130EE3ABC4D53DFB4668389639EDE.
http://www.hindustantimes.com/, NEW DELHI/INDORE edition, Page 3, 3rd column, 2nd row on 1st August 2011).
Shankar, V., Bolton, R.N., An Empirical Analysis of Determinants of Retailer Pricing Strategy. Marketing Sci. 23 (2004) 28–49. Google Scholar
http://www.mobilehandsetdesignline.com/showArticle.jhtml?articleID=208801082&queryText=cmp.
http://www.dhadkanofindia.com/1500-iphones-got-sold-in-first-week-in-india/
http://www.telegraphindia.com/1090922/jsp/business/story˙11526412.jsp
http://www.wired.com/gadgetlab/2008/09/apple-stumbles/
Lau, A., Lau, H.S., Effects of a demand-curve’s shape on the optimal solutions of a multi-echelon inventory/pricing model. Eur. J. Oper. Res. 147 (2003) 530–548. Google Scholar
http://hbswk.hbs.edu/archive/5314.html