Journal
OPERATIONS RESEARCH LETTERS
Volume 39, Issue 4, Pages 278-282Publisher
ELSEVIER SCIENCE BV
DOI: 10.1016/j.orl.2011.04.001
Keywords
Newsboy problem; Forecast update; Random yield; Inventory management; Stochastic dynamic programming
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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. (C) 2011 Elsevier B.V. All rights reserved.
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