This paper is to extend the classical newsvendor model with multistage decision making logic for determining the optimal ordering time and quantity so that the expected profit is maximized. The proposed model correctly represents reality for the newsvendor problem with three distinguishing features: (i) the unit ordering cost and the shortage cost are no longer regarded as the fixed parameters, but rather, are the time-variant functions; (ii) the ordering time has been incorporated into the classical newsvendor model; (iii) a multistage evaluation logic is designed to assure of finding the optimal ordering policy whenever the time lag exists between the decision time and the executive time.
Relation:
International Journal of Information and Management Sciences 17(4), pp.1-14
