Reordering strategies for a newsboy-type product |
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| Affiliation: | 1. Alberta School of Business, University of Alberta, Edmonton, AB T6G 2R6, Canada;2. University of Regina, Regina, SK S4S 0A2, Canada;1. Chair of Logistics and Quantitative Methods, Julius-Maximilians-University Wuerzburg, Sanderring 2, Wuerzburg 97070, Germany;2. MIT-Zaragoza International Logistics Program, Zaragoza Logistics Center, Zaragoza, Spain;3. Center for Transportation and Logistics, The Massachusetts Institute of Technology, USA |
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| Abstract: | This paper considers the very common situation in which a single-period ‘newsboy’ type product may be ordered or produced twice during a season/period. We show that the explicit consideration of this reorder opportunity makes the newsboy problem very much richer. The specific version considered in this paper allows a reorder during mid-season after the early-season demand has been observed, and this reorder arrives after a given lead time. The demand distributions during the various portions of the season may have very general distribution forms; also, the late-season and early-season demands may be dependent. Solution procedures are developed to find the best way to exploit this reorder opportunity, and our numerical solutions indicate that this reorder opportunity can improve profits considerably as long as the product's profit margin is not very high. Other real-world variations of this two-order newsboy problem are briefly discussed. |
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