Let us start our discussion with a famous textbook example: the newsboy problem. The story goes like this. Every morning a newsboy has to decide how many newspapers to buy from a newspaper publisher. Let us assume that the publisher sells the newspaper to the boy at the price of $2 each paper, and the boy then sells the newspaper along the street at the price of $5 per copy. In the end of the d...

In this paper we analyze a supply contract for a single product that speci®es that the cumulative orders placed by a buyer, over a ®nite horizon, be at least as large as a (contracted upon) given quantity. We assume that the demand for the product is uncertain, and the buyer places orders periodically. We derive the optimal purchase policy for the buyer for a given total minimum quantity commit...

Intuition may lead to the hypothesis that in stochastic inventory systems a higher demand variability results in larger variances and in an increase of total expected system costs. In a recent paper, Song [5] formally proved this assertion to hold for a certain class of inventory models (including the Newsboy Problem), given a particular definition of variability. Here we use stochastic dominan...

In a typical inventory planning problem with a life cycle of only one planning period we incur the cost of production per unit produced, profit per unit sold, loss per unit not sold, and lost revenue per unit ordered but not matched due to the lack of availability. The goal is to find the inventory level that maximizes the expected net profit. Textbooks often use the newsboy problem to illustra...

0377-2217/$ see front matter 2008 Elsevier B.V. A doi:10.1016/j.ejor.2008.09.037 * Tel.: +90 312 2901702. E-mail address: [email protected]. In this study, we analyze the replenishment decisions under a general replenishment cost structure that includes stepwise freight costs and all-units quantity discounts. We first formulate a general model that accounts for a larger class of problems an...

In this paper we consider a single inventory (newsboy) problem in which the vendor has a limited amount of funds to purchase items to sell. We assume that the manufacturer will either sell the items to the vendor outright or offer the items to the vendor on a revenue sharing (consignment) basis. In the latter case, that amount of money the vendor pays per unit is less than if the items are purc...