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A Constructive Methodology to Solving the Capacitated Newsvendor Problem: an Approximate Approach

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Abstract

The applications of the capacitated newsvendor problem are numerous. They range from inventory control, supply chain management, and airlines seat reservation to stock market applications. While several solution methodologies exist for this problem, most of them require advanced mathematical programming techniques or specifically developed iterative models. To complement these solution approaches and facilitate wider dissemination of this model particularly to upper-undergraduate and first-year graduate students as well as practitioners in related fields, in this paper, we develop an approximate solution methodology that is based on constructive approaches. These approaches already exist in standard textbooks of operations research, management science, and other similar disciplines. The two models utilized in the development are the classical newsvendor and the network flow model. Numerical comparisons are drawn between existing solution methodologies and the developed ones. Also, an example is presented to show the steps of the developed methodology.

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Acknowledgments

It would be remiss if we do not express our sincere appreciation for the invaluable feedback of two anonymous reviews.

We would also like to acknowledge the participation of the many students who contributed to make this paper possible.

Funding

This study has not received any external funding.

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Authors and Affiliations

  1. Department of Mechanical and Industrial Engineering, New Jersey Institute of Technology, Newark, NJ, 07102, USA

    Layek Abdel-Malek & Pinyuan Shan

  2. Dipartimento di Ingegneriae Architettura, Università di Parma, Viale delle Scienze, 43100, Parma, Italy

    Roberto Montanari

Authors
  1. Layek Abdel-Malek
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  2. Pinyuan Shan
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  3. Roberto Montanari
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Corresponding author

Correspondence to Layek Abdel-Malek.

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The authors declare that they have no conflict of interest.

Appendix

Appendix

Fig. 4
figure 4

Flow chart exhibiting the steps of the proposed methodology

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Abdel-Malek, L., Shan, P. & Montanari, R. A Constructive Methodology to Solving the Capacitated Newsvendor Problem: an Approximate Approach. SN Oper. Res. Forum 1, 8 (2020). https://doi.org/10.1007/s43069-020-0008-7

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