Journal of Korean Society for Quality Management (품질경영학회지)

Korean Society for Quality Management (한국품질경영학회)
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Robust Newsvendor Model With Random Yield and Customer Balking

불확실한 수율과 고객이탈행위를 고려한 강건한 뉴스벤더 모델

  • Jung, Uk (Department of Management, Dongguk University) ;
  • Lee, Se Won (Department of Management, Dongguk University)
  • 정욱 (동국대학교 경영학과) ;
  • 이세원 (동국대학교 경영학과)
  • Received : 2012.10.10
  • Accepted : 2012.12.13
  • Published : 2012.12.31
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Abstract

Purpose: In this paper, we have considered a problem of newsvendor model in an environment of random yields in quality and customer balking behavior, in which only the mean and the variance of the demand are known. In practice, the distributional information of the demand is very limited and only the mean and variance are guessed by experience. In addition, due to the customers balking behavior occurring when the available inventory level decreases, the product's demand becomes a function of inventory level so that the classical newsvendor's optimal order quantity is no longer optimal. Methods: We have developed an optimal order quantity model that enables us to incorporate the random yield of a product and the customer balking information such as a threshold inventory level of balking and the corresponding probability of a sale during the balking. Results: We illustrated the concepts developed here through simple numerical examples and showed the robustness of our model in a various setting of parameters. Conclusion: This paper provides a useful analysis showing that our distribution-specific and distribution-free approach to the optimal order quantity in the newsboy model can act as an effective tools to match supply with demand for these product lines.

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References

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