Evaluating alternative estimators for optimal order quantities in the newsvendor model with skewed demand

This paper considers the classical Newsvendor model, also known as the Newsboy problem, with the demand to be fully observed and to follow in successive inventory cycles one of the Exponential, Rayleigh, and Log-Normal distributions. For each distribution, appropriate estimators for the optimal order quantity are considered, and their sampling distributions are derived. Then, through Monte-Carlo simulations, we evaluate the performance of corresponding exact and asymptotic confidence intervals for the true optimal order quantity. The case where normality for demand is erroneously assumed is also investigated. Asymptotic confidence intervals produce higher precision, but to attain equality between their actual and nominal confidence level, samples of at least a certain size should be available. This size depends upon the coefficients of variation, skewness and kurtosis. The paper concludes that having available data on the skewed demand for enough inventory cycles enables (i) to trace non-normality, and (ii) to use the right asymptotic confidence intervals in order the estimates for the optimal order quantity to be valid and precise.Inventory Control; Newsboy Problem; Skewed Demand; Exact and Asymptotic Confidence Intervals; Monte-Carlo Simulations

Validity and precision of estimates in the classical newsvendor model with exponential and rayleigh demand

In this paper we consider the classical newsvendor model with profit maximization. When demand is fully observed in each period and follows either the Rayleigh or the exponential distribution, appropriate estimators for the optimal order quantity and the maximum expected profit are established and their distributions are derived. Measuring validity and precision of the corresponding generated confidence intervals by respectively the actual confidence level and the expected half-length divided by the true quantity (optimal order quantity or maximum expected profit), we prove that the intervals are characterized by a very important and useful property. Either referring to confidence intervals for the optimal order quantity or the maximum expected profit, measurements for validity and precision take on exactly the same values. Furthermore, validity and precision do not depend upon the values assigned to the revenue and cost parameters of the model. To offer, therefore, a-priori knowledge for levels of precision and validity, values for the two statistical criteria, that is, the actual confidence level and the relative expected half-length are provided for different combinations of sample size and nominal confidence levels 90%, 95% and 99%. The values for the two criteria have been estimated by developing appropriate Monte-Carlo simulations. For the relative-expected half-length, values are computed also analytically.Inventory Control; Classical newsvendor model; Exponential and Rayleigh Distributions; Confidence Intervals; Monte-Carlo Simulations

Research on Ordering Strategy of Capital-Limited Retailers under Stochastic Market Demand

Under the condition of capital constraint on retailer, the retailers can effectively alleviate the funds shortage by delay payments and financing to third party financial institutions. This method will improve the profit of retailer and the performance of the csupply chain. Newsboy model under conditions of permissible delay payments, considers the capital structure of the company in the study of financing problems, and research two-stage supply chain system consisting of suppliers and retailers. An optimal order strategy model of the retailer is constructed, and the Analytical solution of this model is obtained. Then, this paper obtains a series of useful management conclusions through sensitivity analysis

Optimal policy for multi-item systems with stochastic demands, backlogged shortages and limited storage capacity

Producción CientíficaIn this paper, an inventory model for multiple products with stochastic demands is developed. The scheduling period or inventory cycle is known and prescribed. Demands are independent random variables and they follow power patterns throughout the inventory cycle. For each product, an aggregate cycle demand is realized first and then the demand is released to the inventory system gradually according to power patterns within a cycle. These demand patterns express different ways of drawing units from inventory and can be a good approach to modelling customer demands in inventory systems. Shortages are allowed and they are fully backlogged. It is assumed that the warehouse where the items are stored has a limited capacity. For this inventory system, we determine the inventory policy that maximizes the expected profit per unit time. An efficient algorithmic approach is proposed to calculate the optimal inventory levels at the beginning of the inventory cycle and to obtain the maximum expected profit per unit time. This inventory model is applicable to on-line sales of a wide variety of products. In this type of sales, customers do not receive the products at the time of purchase, but sellers deliver goods a few days later. Also, this model can be used to represent inventories of products for in-shop sales when the withdrawal of items from the inventory is not at the purchasing time, but occurs in a period after the sale of the products. This inventory model extends various inventory systems studied by other authors. Numerical examples are introduced to illustrate the theoretical results presented in this work.Ministerio de Ciencia, Innovación y Universidades - Fondo Europeo de Desarrollo Regional (project MTM2017-84150-P

Who Can “Seize the Day?”: Analyzing Who Is an “Employee” for Purposes of Unionization and Collective Bargaining Through the Lens of the “Newsie” Strike of 1899

In the summer of 1899, the Newsboys of New York banded together, formed a union, and began to “strike” against two of the city’s largest newspapers in response to a price increase. After a two-week struggle, the newspaper companies agreed to compromise by buying back any unsold papers at the end of the day from the Newsboys. They did not, however, agree to the Newsboys’ classification of the effort as a “strike.” The newspapers saw this as a boycott of non-employees, or independent contractors. After the turn of the century, Congress began to pass laws protecting employees, and in 1935 they passed the National Labor Relations Act (NLRA), which protected employees’ rights to unionize, collectively bargain, and strike. The Newsboys, eager to solidify their rights, argued to the Supreme Court in 1944, in NLRB. v. Hearst Publications, Inc., that they were in fact employees. Although the Court agreed, Congress did not, and in response passed the “Taft-Hartley” amendments to the NLRA. These amendments excluded independent contractors from the definition of employee, introducing a major issue into the labor realm—how do you differentiate between an independent contractor and an employee for the purposes of unionization and collective bargaining? This Note examines the distinction between employees and independent contractors through the case example of the Newsboys and ponders if the distinction is necessary or if it merely denies workers’ rights

Who Can “Seize the Day?”: Analyzing Who Is an “Employee” for Purposes of Unionization and Collective Bargaining Through the Lens of the “Newsie” Strike of 1899

In the summer of 1899, the Newsboys of New York banded together, formed a union, and began to “strike” against two of the city’s largest newspapers in response to a price increase. After a two-week struggle, the newspaper companies agreed to compromise by buying back any unsold papers at the end of the day from the Newsboys. They did not, however, agree to the Newsboys’ classification of the effort as a “strike.” The newspapers saw this as a boycott of non-employees, or independent contractors. After the turn of the century, Congress began to pass laws protecting employees, and in 1935 they passed the National Labor Relations Act (NLRA), which protected employees’ rights to unionize, collectively bargain, and strike. The Newsboys, eager to solidify their rights, argued to the Supreme Court in 1944, in NLRB. v. Hearst Publications, Inc., that they were in fact employees. Although the Court agreed, Congress did not, and in response passed the “Taft-Hartley” amendments to the NLRA. These amendments excluded independent contractors from the definition of employee, introducing a major issue into the labor realm—how do you differentiate between an independent contractor and an employee for the purposes of unionization and collective bargaining? This Note examines the distinction between employees and independent contractors through the case example of the Newsboys and ponders if the distinction is necessary or if it merely denies workers’ rights

Ederington's ratio with production flexibility

The impact of flexibility upon hedging decision is examined for a competitive firm under demand uncertainty. We show that if the firm can adapt its production subsequently to its hedging decision, the standard minimum variance hedge ratio from Ederington (Journal of Finance 34, 1979) is systematically biased. This resulting bias depends on the statistical relation between demand and futures prices.

Wage rigidities, barriers to entry and the welfare state: Their impact on labor markets in industrialized countries

The above quotes exemplify quite well the strange world in which we live: on the one hand governments over the last 30 years have generally attempted to enact measures to liberalize international trade (and as a matter of fact the movement of factors of production) so as to be able to profit - in the form of higher employment levels - from a more efficient allocation of resources. On the other hand, in many of the same countries governments (and/or unions) have effected (or supported) measures for domestic labor markets, the impact of which runs counter to the expected gains from a reduction in trade barriers. In other words, while a rapid expansion of international trade may have contributed significantly to creating employment, measures affecting the training, employment, remuneration and/or social security of the working-age population may well have caused jobs or job opportunities to disappear or job-seeking activities to be otherwise structured.

Entrepreneurs and newsvendors : do small businesses follow the newsvendor logic when making inventory decisions?

This work empirically assesses the degree to which inventory decisions made by entrepreneurs and small businesses are informed by the logic underlying the newsvendor or base stock model and are influenced by the decision-maker’s risk profile. We used a web- and email-based survey, combined with a telephone follow-up to elicit risk profiles, obtaining 51 usable responses. Our findings suggest that entrepreneurs do follow the newsvendor logic, but more so for high-margin than for best-selling products. We find that entrepreneurs’ risk profiles are consistent with a key prediction from prospect theory, displaying risk aversion for profits and risk-seeking behavior for losses. Furthermore, we find that risk aversion for profits is associated with higher safety stocks, in contradiction to existing theory, and discuss several possible explanations for this finding

Robust newsvendor problem with autoregressive demand

This paper explores the classic single-item newsvendor problem under a novel setting which combines temporal dependence and tractable robust optimization. First, the demand is modeled as a time series which follows an autoregressive process AR(p), p ≥ 1. Second, a robust approach to maximize the worst-case revenue is proposed: a robust distribution-free autoregressive forecasting method, which copes with non-stationary time series, is formulated. A closed-form expression for the optimal solution is found for the problem for p = 1; for the remaining values of p, the problem is expressed as a nonlinear convex optimization program, to be solved numerically. The optimal solution under the robust method is compared with those obtained under two versions of the classic approach, in which either the demand distribution is unknown, and assumed to have no autocorrelation, or it is assumed to follow an AR(p) process with normal error terms. Numerical experiments show that our proposal usually outperforms the previous benchmarks, not only with regard to robustness, but also in terms of the average revenue.Ministerio de Economía y CompetitividadJunta de Andalucí