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2014 Joint Pricing and Purchasing Decisions for the Dual-Channel Newsvendor Model with Partial Information
Jixiang Zhou, Yong Wang, Xiaoming Yan
J. Appl. Math. 2014: 1-12 (2014). DOI: 10.1155/2014/954073

Abstract

We investigate a joint pricing and purchasing problem for the dual-channel newsvendor model with the assumption that only the mean and variance of the demand are known. The newsvendor in our model simultaneously distributes a single product through traditional retail and Internet. A robust optimization approach that maximizes the worst-case profit is adapted under the aforementioned conditions to model demand uncertainty and linear clearing functions that characterize the relationship between demand and prices. We obtain a close-form expression for the robust optimal policy. Illustrative simulations and numerical experiments show the effects of several parameters on the optimal policy and on newsvendor performance. Finally, we determine that the gap between newsvendor performance under demand certainty and uncertainty is minimal, which shows that the robust approach can significantly improve performance.

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Jixiang Zhou. Yong Wang. Xiaoming Yan. "Joint Pricing and Purchasing Decisions for the Dual-Channel Newsvendor Model with Partial Information." J. Appl. Math. 2014 1 - 12, 2014. https://doi.org/10.1155/2014/954073

Information

Published: 2014
First available in Project Euclid: 2 March 2015

zbMATH: 07132012
Digital Object Identifier: 10.1155/2014/954073

Rights: Copyright © 2014 Hindawi

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