An Extended Newsvendor Model with Service Level Constraint and Capacity Constraint

Abstract

Abstract: Extended newsvendor models are considered in this paper for two cases: one with service level constraint and the other with capacity constraint. We first develop the two models with service level constraint and capacity constraint, respectively. Then, optimal order quantity for these two cases is derived and the properties of optimal solutions are analyzed. Based on the analysis results, an extended newsvendor model with both service level and capacity constraints are presented. Then, effect of service level and capacity constraints on the optimal order quantity and the expected profit of the newsvendor is explored. A numerical study is presented to illustrate and validate the proposed method.

Key words: newsvendor model, service level, capacity constraint

Xie Yong, Xiang Li, Wang Hong-wei, Chen Shuang. An Extended Newsvendor Model with Service Level Constraint and Capacity Constraint[J]. Industrial Engineering Journal , 2012, 15(4): 47-52.

References

［1］李雪敏, 缪立新, 徐青青. 报童模型的研究进展综述［J］. 统计与决策, 2008，28(17): 11-14. Li Xue-min, Miu Li-xin,Xu Qin-qin. A review on advance of newsvendor model［J］. Statistics and decision, 2008，28(17): 11-14. ［2］Khouja M. The single-period (newsvendor) problem: literature review and suggestions for future research ［J］.Omega, 1999, 27(5): 537-553. ［3］Wang T Y, Hu J M. An inventory control system for products with optional components under service level and budget constraints［J］. European Journal of Operational Research, 2008，189（1）:41-58. ［4］张怡, 陈旭. 考虑服务水平约束的零售商订货策略研究［J］. 预测,2010, 29(6): 57-61. Zhang Yi, Chen Xu. Retailer’s order policy with service level constraint［J］. Forecasting, 2010,29(6): 57-61. ［5］申成霖, 张新鑫, 卿志琼. 服务水平约束下基于顾客策略性退货的供应链契约协调研究［J］. 中国管理科学, 2010, 18(4): 56-64. Shen Cheng-lin, Zhang Xin-xin, Qing Zhi-qiong. Supply chain contracts coordination with consumer’s strategic returns policies under the service level constrain［J］.Chinese Journal of Management Science, 2010, 18(4): 56-64. ［6］Ouyang L Y, Wu K S. Mixture inventory model involving variable lead-time with a service level constraint［J］. Computers and Operations Research, 1997, 24(9): 875-882.  ［7］Jha J K, Shanker K. Two-echelon supply chain inventory model with controllable lead time and service level constraint［J］. Computers and Industrial Engineering, 2009，57（3）: 1096-1104. ［8］Mahdi M T. On the distribution free continuous-review inventory model with a service level constraint［J］. Computers and Industrial Engineering, 2010，59（4）: 1022-1024. ［9］Zhang Bin, Du Shao-fu. Multi-product newsboy problem with limited capacity and outsourcing［J］. European Journal of Operational Research, 2010,202(1): 107-113. ［10］Stenen J E. Optimal and heuristic solutions for the multi-item newsvendor problem with a single capacity constraint［J］. Production and Operations Management, 2000, 9(3): 303-318. ［11］Zhao Xiao-bo, Fan Fan, Liu Xiao-liang, et al. Storage-space capacitated inventory system with (r, Q) policies［J］. Operation Research, 2007, 55(5): 854-865. ［12］杨磊,王明征,李文立. 两种带有能力(Capacity)约束的报童风险模型最优策略［J］. 系统工程理论与实践, 2008, 28(4): 35-42. Yang Lei,Wang Ming-zheng, Li Wen-li. Two types of capacitated risk-averse newsvendor models［J］. Systems engineering theory & practice, 2008, 28(4): 35-42. ［13］苏欣,林正华,杨丽. 带有预算费用约束的报童模型［J］.吉林大学学报:理学版, 2004, 42(03):371-374. Su Xin, Lin Zheng-hua,Yang Li. A newsboy model with budget cost constraints［J］. Journal of JiLin University: Science Edition, 2004, 42(03):371-374. ［14］Chen M S, Chuang C C. An extended newsboy problem with shortage-level constraints ［J］.International Journal of Production Economics, 2000, 67(3): 269-277. ［15］周艳菊,邱菀华,王宗润. 损失约束下多产品报童问题的求解方法研究［J］.控制与决策,2007,22(9): 1005-1010. Zhou Yan-ju, Qiu Wan-hua, Wang Zong-run. Solving approach to multi-product newsvendor model with loss constraint［J］.Control and decision, 2007,22(9): 1005-1010. ［16］Cherikh M. On the effect of centralization on expected profits in a multi-location newsboy problem ［J］.The Journal of the Operational Research Society, 2000, 51(6):755-761. ［17］S Jian-mai, Z Guo-qing, S Ji-chang. Jointly pricing and ordering for a multi-product multi-constraint newsvendor problem with supplier quantity discounts［J］. Applied Mathematical Modelling,2011, 35(6): 3001-3011. ［18］赵晓波, 黄四民. 库存管理［M］. 北京: 清华大学出版社, 2008.

[1]	CHEN Jiayuan, ZHOU Gang. The Impact of Service Level on Price Strategy of High-speed Rail Express Supply Chain under Different Dominant Structure [J]. Industrial Engineering Journal, 2021, 24(4): 168-176.
[2]	WU Pengxing, HE Xinhua, HU Wenfa. A Research on Manufacturer Quality and Service Decision Considering Product Returns [J]. Industrial Engineering Journal, 2021, 24(2): 92-99.
[3]	XIAO Min, ZHANG Yao. A Research on Closed-loop Supply Chain Decision Mechanism Under Dual Intervention and Capacity Constraints [J]. Industrial Engineering Journal, 2020, 23(4): 28-35.
[4]	LI Tingting. A Model for Identifying Critical Hubs in Capacitated Hub-and-spoke Networks [J]. Industrial Engineering Journal, 2020, 23(2): 100-104,123.
[5]	LI Shourong, ZHANG Renqian. A Research on Ordering of Cross-selling Products based on Business Expansion [J]. Industrial Engineering Journal , 2018, 21(2): 19-26.
[6]	HUANG Jianhui. Distribution Channel Selecting in Agricultural Supply Chain Based on Network Service Level [J]. Industrial Engineering Journal , 2016, 19(4): 76-82.
[7]	XIONG Hengqing. An Analysis of Perishable Product Order Timing in Perspective of Service Level [J]. Industrial Engineering Journal , 2016, 19(3): 24-29.
[8]	Lin Zhi-bing, Zhou Zheng-yong, Wu Shao-xiong. Advance Selling in the Presence of Strategic Consumers and Network Externality [J]. Industrial Engineering Journal , 2015, 18(2): 66-72.
[9]	Lei Tao1， Qu Ting1,2， Nie Du-xian1,3，Huang Guo-quan1,2. An Optimal Configuration of Multi-echelon Assembly Supply Chains Under Capacity Constraints [J]. Industrial Engineering Journal , 2014, 17(5): 93-98.
[10]	Zhang Si, Zhang Qing. Decentralized Inventory Control Strategy in Dual-channel Supply-Chain with Service Level Influence [J]. Industrial Engineering Journal , 2013, 16(6): 106-112.
[11]	Xie Yong, Meng Chu, Wang Hong-wei. A Research on Overconfident Newsvendor Model [J]. Industrial Engineering Journal , 2013, 16(4): 38-43.
[12]	Zhang Jing1,2, Hu Ming3, Wang Bo1. Empirical Study on Electronic Public Service Evaluation by Using Optimal Fuzzy Cluster Models [J]. Industrial Engineering Journal , 2013, 16(2): 92-96.
[13]	Liu Shu-ren1,2, Li Wei2, Wang Na2. Study on Joint Inventory-Pricing Decision-Making in Reverse Auction Procurement [J]. Industrial Engineering Journal , 2013, 16(1): 99-104.
[14]	Zhang Xu-mei1,2， Liu Xiang-yu1,2， Fu Hong-yong1,2. Manufacturer's Sales Channel Selection for Extended Warranty Based on the Influence of Service Level [J]. Industrial Engineering Journal , 2012, 15(6): 44-49.
[15]	Li Ji-cai1,2, Zhou Yong-wu2, Xiao Dan2, Liu Zhe-rui2. On the Optimal Marketing Strategy for Seasonal Products under the CVaR Criterion [J]. Industrial Engineering Journal , 2012, 15(5): 8-14.