Newsvendor models with dependent random supply and demand

The newsvendor model is perhaps the most widely analyzed model in inventory management. In this single-period model, the only source of randomness is the demand during the period and one tries to determine the optimal order quantity in view of various cost factors. We consider an extention where supply is also random so that the quantity ordered is not necessarily received in full at the beginning of the period. Such models have been well-received in the literature with the assumption of independence between demand and supply. In this setting, we suppose that the random demand and supply are not necessarily independent. We focus on the resulting optimization problem and provide interesting characterizations on the optimal order quantity.

[1]  Jing-Sheng Song,et al.  Inventory Control in a Fluctuating Demand Environment , 1993, Oper. Res..

[2]  Doğan A. Serel,et al.  Inventory and pricing decisions in a single-period problem involving risky supply , 2008 .

[3]  Yigal Gerchak,et al.  Multiple Lotsizing in Production to Order with Random Yields: Review of Recent Advances , 2004, Ann. Oper. Res..

[4]  Süleyman Özekici,et al.  Optimal policies for inventory systems with finite capacity and partially observed Markov-modulated demand and supply processes , 2010, Eur. J. Oper. Res..

[5]  S. Chopra,et al.  Managing Risk To Avoid Supply-Chain Breakdown , 2004 .

[6]  Mahmut Parlar,et al.  Inventory models with unreliable suppliersin a random environment , 1999, Ann. Oper. Res..

[7]  Uta Jüttner.  Supply chain risk management: Understanding the business requirements from a practitioner perspective , 2005 .

[8]  Gerald Keller,et al.  Concepts, Theory, and Techniques THE LOT-SIZE REORDER-POINT MODEL WITH UPSTREAM-DOWNSTREAM UNCERTAINTY* , 1986 .

[9]  Guillermo Gallego,et al.  Optimal Policies for Production/Inventory Systems with Finite Capacity and Markov-Modulated Demand and Supply Processes , 2004, Ann. Oper. Res..

[10]  Suresh P. Sethi,et al.  Optimality of (s, S) Policies in Inventory Models with Markovian Demand , 1995, Oper. Res..

[11]  Andreas Norrman,et al.  Ericsson’s Proactive Supply Chain Risk Management-approach After a Serious Supplier Accident , 2004 .

[12]  Panagiotis Kouvelis,et al.  On the Integration of Production and Financial Hedging Decisions in Global Markets , 2007, Oper. Res..

[13]  W. Shih.  Optimal inventory policies when stockouts result from defective products , 1980 .

[14]  Sridhar Seshadri,et al.  Hedging Inventory Risk Through Market Instruments , 2005, Manuf. Serv. Oper. Manag..

[15]  M. Parlar,et al.  Periodic Review Production Models With Variable Yield And Uncertain Demand , 1988 .

[16]  Yigal Gerchak,et al.  The Structure of Periodic Review Policies in the Presence of Random Yield , 1990, Oper. Res..

[17]  Jian Ni,et al.  Inventory Risk Mitigation by Financial Hedging , 2009 .

[18]  David F. Pyke,et al.  Inventory management and production planning and scheduling , 1998 .

[19]  Hau L. Lee,et al.  Lot Sizing with Random Yields: A Review , 1995, Oper. Res..

[20]  S. Karlin,et al.  Studies in the Mathematical Theory of Inventory and Production, by K.J. Arrow, S. Karlin, H. Scarf with contributions by M.J. Beckmann, J. Gessford, R.F. Muth. Stanford, California, Stanford University Press, 1958, X p.340p., $ 8.75. , 1959, Bulletin de l'Institut de recherches économiques et sociales.

[21]  Paul H. Zipkin,et al.  Inventory Control with Information About Supply Conditions , 1996 .

[22]  Süleyman Özekici,et al.  Inventory models with random yield in a random environment , 2002 .