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The distribution‐free newsboy problem and the demand skew
Author(s) -
Kamburowski Jerzy
Publication year - 2015
Publication title -
international transactions in operational research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.032
H-Index - 52
eISSN - 1475-3995
pISSN - 0969-6016
DOI - 10.1111/itor.12139
Subject(s) - newsvendor model , skewness , skew , upper and lower bounds , variance (accounting) , computer science , mathematical optimization , distribution (mathematics) , axiom , profit (economics) , probability distribution , kurtosis , scope (computer science) , econometrics , mathematics , economics , statistics , microeconomics , telecommunications , supply chain , mathematical analysis , programming language , geometry , accounting , political science , law
We consider the newsboy problem when the information about the probability distribution of random demand is limited to its support, mean, variance, and skewness. Sharp lower and upper bounds on the maximum expected profit are derived that lead to the corresponding optimal order quantities found under the worst‐case and best‐case scenarios. In addition, some special cases are solved by reducing the scope of knowledge about the demand distribution. Consequently, we generalize all results presented so far in the literature for the two scenarios, and present several new results. A numerical example illustrates the impact of available information on the quality of approximations. Extensions of our results are indicated.