Unreliable newsboy problem with a forecast update

Unreliable newsboy problem with a forecast update

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Article ID: iaor20117382
Volume: 39
Issue: 4
Start Page Number: 278
End Page Number: 282
Publication Date: Jul 2011
Journal: Operations Research Letters
Authors: , ,
Keywords: forecasting: applications
Abstract:

In this paper, we derive an optimal ordering policy for an unreliable newsboy who can place two sequential orders before the start of a single selling season by using a demand forecast update. Supply yield is modeled using a uniform distribution considering both the minimum order guarantee and the maximum yield. Our results indicate that a firm should focus on increasing the minimum order guarantee from a first stage supplier to reduce its total supply chain cost.

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