B0363
Title: Asymmetric generalized newsvendor model
Authors: Sujay Kumar Mukhoti - IIM Indore (India) [presenting]
Abhirup Banerjee - University of Oxford (United Kingdom)
Abstract: The classical newsboy problem has been extended in many directions to accommodate more realistic inventory scenarios. A single-period inventory problem is considered where the product is short-lived and the severity of leftover and shortages are not the same. Such a model would play an important role in deciding the optimum inventory level of, e.g. greengrocers or supermarkets, among others who are selling such short-lived items. The concept of importance function is introduced. Further, it is characterized in terms of the dimension of the cost function and its relation with realized demand and inventory level. The model proposed considers different importance for leftover and shortage. The conditions for the existence of feasible solutions to the optimal order quantity determination problem are provided. Results from a number of numerical instances are also presented with specific importance functions. The numerical results show that higher importance to a type of loss results in conservative inventory orders in the direction of the corresponding importance.
