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NEWSVENDOR PROBLEM WITH PRICING: PROPERTIES, ALGORITHMS, AND SIMULATION

By M. E. Kuhl, N. M. Steiger, F. B. Armstrong, J. A. Joines, Roger L. Zhan and Zuo-jun Max Shen

Abstract

When a newsvendor faces stochastic price-sensitive demands, he/she has to make the pricing and inventory decisions before the demand is realized. In the literature, this problem is typically solved by reducing it to an optimization problem over a single variable. In contrast, we treat this problem as a nonlinear system of two variables and provide some solution properties (e.g. existence, uniqueness) of the system. We also develop an iterative algorithm and a simulation based algorithm for this problem.

Year: 2014
OAI identifier: oai:CiteSeerX.psu:10.1.1.415.2924
Provided by: CiteSeerX
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