Sourcing with random yields and stochastic demand: A newsvendor approach

Sourcing with random yields and stochastic demand: A newsvendor approach

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Article ID: iaor20083782
Country: United Kingdom
Volume: 34
Issue: 12
Start Page Number: 3682
End Page Number: 3690
Publication Date: Dec 2007
Journal: Computers and Operations Research
Authors: , ,
Keywords: programming: nonlinear
Abstract:

We studied a supplier selection problem, where a buyer, while facing random demand, is to decide ordering quantities from a set of suppliers with different yields and prices, We provided the mathematical formulation for the buyer's profit maximization problem and proposed a solution method based on a combination of the active set method and the Newton search procedure. Our computational study shows that the proposed method can solve the problem efficiently, and is able to generate interesting and insightful results that lead us to various managerial implications.

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