Analysis of the Newsboy Problem subject to price dependent demand and multiple discounts

Shouyu Ma (mashouyufr@gmail.com), Zied Jemai (zied.jemai@centralesupelec.fr), Evren Sahin (evren.sahin@centralesupelec.fr) and Yves Dallery (yves.dallery@centralesupelec.fr)
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Shouyu Ma: LGI - Laboratoire Génie Industriel - EA 2606 - CentraleSupélec
Evren Sahin: LGI - Laboratoire Génie Industriel - EA 2606 - CentraleSupélec
Yves Dallery: LGI - Laboratoire Génie Industriel - EA 2606 - CentraleSupélec

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Abstract: Existing papers on the Newsboy Problem that deal with price dependent demand and multiple discounts often analyze those two problems separately. This paper considers a setting where price dependence and multiple discounts are observed simultaneously, as is the case of the apparel industry. Henceforth, we analyze the optimal order quantity, initial selling price and discount scheme in the News-Vendor Problem context. The term of discount scheme is often used to specify the number of discounts as well as the discount percentages. We present a solution procedure of the problem with general demand distributions and two types of price-dependent demand: additive case and multiplicative case. We provide interesting insights based on a numerical study. An approximation method is proposed which confirms our numerical results.

Date: 2018-07
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Citations: View citations in EconPapers (2)

Published in Journal of Industrial and Management Optimization, 2018, 14 (3), pp.931-951. ⟨10.3934/jimo.2017083⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01672382

DOI: 10.3934/jimo.2017083

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