On the unimodality of the manufacturer's objective function in the newsvendor model

On the unimodality of the manufacturer's objective function in the newsvendor model

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Article ID: iaor20061720
Country: Netherlands
Volume: 34
Issue: 1
Start Page Number: 46
End Page Number: 48
Publication Date: Jan 2006
Journal: Operations Research Letters
Authors:
Keywords: demand
Abstract:

We derive new sufficient conditions for the manufacturer's profit function to be unimodal. We show that if the demand density function is unimodal and right-skewed, then the profit function is quasi-concave over the support of the distribution. We also report some counterintuitive properties of the profit function.

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