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Newsvendor models with dependent random supply and demand

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Abstract

The newsvendor model is perhaps the most widely analyzed model in inventory management. In this single-period model, the only source of randomness is the demand during the period and one tries to determine the optimal order quantity in view of various cost factors. We consider an extention where supply is also random so that the quantity ordered is not necessarily received in full at the beginning of the period. Such models have been well-received in the literature with the assumption of independence between demand and supply. In this setting, we suppose that the random demand and supply are not necessarily independent. We focus on the resulting optimization problem and provide interesting characterizations on the optimal order quantity.

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Acknowledgments

This research is supported by the Turkish Scientific and Technological Research Council through Grant 110M620. F. Karaesmen’s research is partially supported by the TÜBA-GEBİP programme.

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Authors and Affiliations

  1. Department of Industrial Engineering, Koç University, Sarıyer, 34450 , İstanbul, Turkey

    H. K. Okyay, F. Karaesmen & S. Özekici

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  1. H. K. Okyay
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  2. F. Karaesmen
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  3. S. Özekici
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Correspondence to S. Özekici.

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Okyay, H.K., Karaesmen, F. & Özekici, S. Newsvendor models with dependent random supply and demand. Optim Lett 8, 983–999 (2014). https://doi.org/10.1007/s11590-013-0616-7

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  • DOI: https://doi.org/10.1007/s11590-013-0616-7

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