The single-item newsboy problem with dual performance measures and quantity discounts

This paper considers models for the single-item newsboy problem with quantity discount and the following dual performance measure ‘maximize the expected profit subject to a constraint that the probability of achieving a target profit level is no less than a predetermined risk level’. We also consider two types of quantity discount: all-unit and incremental. For our models with zero shortage cost, a closed-form solution for determining the optimal order quantity is derived. However, models with positive shortage cost can only be solved numerically.