Paper Info
Title
The Effect Of Yield Rate In A General Price-Setting Newsvendor Model With A Yield-Dependent Secondary Market
Abstract
We considered a general price-setting newsvendor model in which the firm needs to make joint inventory and pricing decisions for short life-cycle products before the selling season. The firm's production is subject to random yield and the retailer faces uncertain demand. There exists a secondary market for the firm to acquire or dispose of products. We study the effects of yield randomness on optimal decisions and the expected profit in the cost structure, on the condition that the unit prices of the secondary emergency purchase and sale are random functions of the yield. Using the theory of stochastic comparisons, our key findings are as follows. (a) When the unit price of secondary emergency purchase is nonincreasing with the yield realization, a stochastically larger yield rate leads to a higher expected profit for both supply cases. Moreover, for the multiplicative supply case, a stochastically larger yield rate results in a lower optimal sale price, but this is not true in the additive supply case. Numerical examples show that the effect of the yield rate on the optimal order quantity is uncertain for two supply cases. (b) When the unit price of secondary emergency purchase is nonincreasing convexly with the yield realization, a less variable yield rate leads to a higher expected profit for both supply cases. Numerical examples illustrate that the effects of the yield rate on the optimal sale price and the optimal order quantity are also uncertain. (c) Based on graphical comparisons, we find that the effect of yield randomness has a more significant impact on supply chain performance with a yield-dependent secondary market price than that with a constant secondary market price.
Year
DOI
Venue
2019
10.1111/itor.12413
INTERNATIONAL TRANSACTIONS IN OPERATIONAL RESEARCH
Keywords
Field
DocType
newsvendor model, demand uncertainty, stochastic methods, random yield, secondary market
Secondary market,Newsvendor model,Multiplicative function,Economic order quantity,Microeconomics,Unit price,Supply chain,Law of supply,Mathematics,Randomness
Journal
Volume
Issue
ISSN
26
6
0969-6016
Citations 
PageRank 
References 
0
0.34
17
Authors
6
Name
Order
Citations
PageRank
Li Yu100.34
Jun Pei220226.56
Jun Pei320226.56
Xin-Bao Liu425426.14
Wenjuan Fan514110.09
Panos M. Pardalos614119.60