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Newsboy Problem: Viability of Optimal Initial Selling Price and Ordering Policies in the Presence of Exogenous Price Decline and Random Lead Time

Published online by Cambridge University Press:  29 November 2013

Ningombam Sanjib Meitei  and
Snigdha Banerjee
Ningombam Sanjib Meitei
Affiliation:
School of Statistics, Devi Ahilya University, Vigyan Bhawan, Khandwa Road, Indore-452001, India.. sanjibmeiteicha@rediffmail.com; bans1@rediffmail.com
Snigdha Banerjee
Affiliation:
School of Statistics, Devi Ahilya University, Vigyan Bhawan, Khandwa Road, Indore-452001, India.. sanjibmeiteicha@rediffmail.com; bans1@rediffmail.com
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Abstract

Analysis of empirical sales data lead us to consider newsboy model for four practical market conditions arising from the presence/absence of stochastic lead time and exogenous linear temporal decline in selling price when distribution of the stochastic demand depends upon initial selling price. Viability of the solutions is discussed for three strategies of obtaining optimal initial selling price and/or ordering quantity. Numerical studies are conducted to assess the effects of lead time and price decline.

Keywords

Stochastic lead-timeexogenous price declinepricinginitial selling priceviable policies
Type
Research Article
Information
RAIRO - Operations Research , Volume 47 , Issue 4 , September 2013 , pp. 371 - 394
Copyright
© EDP Sciences, ROADEF, SMAI 2013

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