Newsvendor problems: An integrated method for estimation and optimisation

Congzheng Liu, Adam N. Letchford and Ivan Svetunkov

European Journal of Operational Research, 2022, vol. 300, issue 2, 590-601

Abstract: Newsvendor problems (NVP) form a classical and important family of stochastic optimisation problems. In this paper, we consider a data-driven method proposed recently by Ban and Rudin. We first examine it from a statistical viewpoint, and establish a connection with quantile regression. We then extend the approach to nonlinear NVP. Finally, we give extensive experimental results, on both simulated and real data. The results indicate that the approach performs as well as conventional ones when applied to linear NVP, but performs better when applied to nonlinear NVP. There is also evidence that the approach is more robust with respect to model misspecification.

Keywords: Inventory; Forecasting; Newsvendor problems; Data-driven optimisation; Sales and operations planning (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:300:y:2022:i:2:p:590-601

DOI: 10.1016/j.ejor.2021.08.013

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