Order Quantity Problem for Fuzzy Market Demand

2010 ◽  
Author(s):  
Li Li ◽  
Liu Jie
Keyword(s):  
Market Demand ◽  
Order Quantity

scholarly journals Coping with Loss Aversion in the Newsvendor Model

2015 ◽  
Vol 2015 ◽  
pp. 1-11 ◽  
Author(s):  
Jianwu Sun ◽  
Xinsheng Xu
Keyword(s):  
Expected Utility ◽  
Loss Aversion ◽  
Confidence Level ◽  
Profit Maximization ◽  
Optimal Order ◽  
Market Demand ◽  
Newsvendor Model ◽  
Order Quantity ◽  
Decision Bias ◽  
Optimal Order Quantity

We introduce loss aversion into the decision framework of the newsvendor model. By introducing the loss aversion coefficientλ, we propose a novel utility function for the loss-averse newsvendor. First, we obtain the optimal order quantity to maximize the expected utility for the loss-averse newsvendor who is risk-neutral. It is found that this optimal order quantity is smaller than the expected profit maximization order quantity in the classical newsvendor model, which may help to explain the decision bias in the classical newsvendor model. Then, to reduce the risk which originates from the fluctuation in the market demand, we achieve the optimal order quantity to maximize CVaR about utility for the loss-averse newsvendor who is risk-averse. We find that this optimal order quantity is smaller than the optimal order quantity to maximize the expected utility above and is decreasing in the confidence levelα. Further, it is proved that the expected utility under this optimal order quantity is decreasing in the confidence levelα, which verifies that low risk implies low return. Finally, a numerical example is given to illustrate the obtained results and some management insights are suggested for the loss-averse newsvendor model.

scholarly journals Contracts Adjustment under Bilateral Information Updating in a Supply Chain

Complexity ◽  
2020 ◽  
Vol 2020 ◽  
pp. 1-15
Author(s):  
Xinhui Wang ◽  
Yingsheng Su ◽  
Zihan Zhou ◽  
Yiling Fang
Keyword(s):  
Supply Chain ◽  
Production Cost ◽  
Wholesale Price ◽  
Transfer Payment ◽  
Market Demand ◽  
Order Quantity ◽  
Minimum Order ◽  
Information Updating ◽  
Minimum Order Quantity ◽  
Market Outlook

This paper investigates contracts adjustment between one manufacturer and one retailer under bilateral information updating. The manufacturer incurs uncertain production cost and the retailer faces uncertain demand, but they can acquire independent signals to update production cost and demand, respectively. They commit an initial agreement on an initial wholesale price, minimum order quantity, and information sharing as well as the transfer payment and decisions adjustment when information is updated. We find that due to the joint impact of production cost variation and market variation, the manufacturer may not decrease (increase) her wholesale price when the updated production cost is lower (higher) than expected. The retailer places an additional order even if the wholesale price rises when the market outlook is good, but places an order with the minimum order quantity even if the wholesale price falls when the market outlook is bad. Secondly, for a certain level of information accuracy of the production cost and market demand, the retailer is always better off with information updating, but the manufacturer may be worse off with information updating when facing a bad market outlook. Thirdly, when information accuracy of the production cost and market demand varies, the manufacturer only benefits from a high accuracy of production cost. Profits of the retailer and the supply chain are increasing (decreasing) with accuracy of production cost if the updated production cost is larger (smaller) than expected.

Cost-Sharing Contract in Low Carbonization Supply Chain Based on Improving Demand for Low-Carbon Products

2014 ◽  
Vol 1073-1076 ◽  
pp. 2539-2544
Author(s):  
Yan Ju Zhou ◽  
Yu Qing Huang
Keyword(s):  
Supply Chain ◽  
Cost Sharing ◽  
Emission Reduction ◽  
Carbon Emission ◽  
Retail Price ◽  
Market Demand ◽  
Low Carbon ◽  
Order Quantity ◽  
Carbon Emission Reduction ◽  
Reduction Cost

For the existence of carbon emission reduction cost, the retail price of the products is so high that the market demand is low, which restricts the promotion of low-carbon products. On the background of a bilateral-monopoly supply chain consisting of a single manufacturer and a single retailer, we establish Stackelberg models based on the carbon emission reduction cost-sharing. And we analyze the changes of the order quantity, the profits of each member and the whole supply chain before and after the implementation of the carbon emission reduction cost-sharing contract. According to the research, when the carbon emission reduction cost-sharing contract is introduced into the model, it leads to a good consequence that the optimal order quantity of the low-carbon product increases, the retail price decreases, and the manufacturer and the retailer will get Pareto improvement on certain condition. Then we derivate the necessary conditions that the profit of the retailer and the manufacturer could both increase.

scholarly journals Supply Chain Coordination with Carbon Trading Price and Consumers’ Environmental Awareness Dependent Demand

2018 ◽  
Vol 2018 ◽  
pp. 1-11 ◽  
Author(s):  
Qinghua Pang ◽  
Mingzhen Li ◽  
Tiantian Yang ◽  
Yi Shen
Keyword(s):  
Supply Chain ◽  
Carbon Emissions ◽  
Supply Chain Coordination ◽  
Environmental Awareness ◽  
Emissions Reduction ◽  
Carbon Trading ◽  
Market Demand ◽  
Order Quantity ◽  
Price Increases ◽  
Carbon Emissions Reduction

Carbon emissions reduction in supply chain is an effective method to reduce the greenhouse effect. The paper investigates the impacts of carbon trading price and consumers’ environmental awareness on carbon emissions in supply chain under the cap-and-trade system. Firstly, it analyzes the centralized decision structure and obtains the requirements to coordinate carbon emissions reduction and order quantity in supply chain. Secondly, it proposes the supply chain coordination mechanism with revenue-sharing contract based on quantity discount policy, and the requirements that the contract parameters need to satisfy are also given. Thirdly, assuming the market demand is affected by consumer’s environmental awareness in addition form, the paper proposes the methods to determine the optimal order quantity and the optimal level of carbon emissions through model optimization. Finally, it investigates the impacts of carbon trading price on carbon emissions in supply chain. The results show that clean manufacturer’s optimal per-unit carbon emissions increase as the carbon trading price increases, while nongreen manufacturer’s optimal per-unit carbon emissions decrease as the carbon trading price increases. For the middle emissions manufacturer, the optimal per-unit carbon emissions depend on the relationship between the carbon trading price and the carbon reduction coefficient.

scholarly journals Opportunity Loss Minimization and Newsvendor Behavior

2017 ◽  
Vol 2017 ◽  
pp. 1-11
Author(s):  
Xinsheng Xu ◽  
Hong Yan ◽  
Chi Kin Chan
Keyword(s):  
Conditional Value At Risk ◽  
Optimal Order ◽  
Market Demand ◽  
Newsvendor Model ◽  
Order Quantity ◽  
Loss Minimization ◽  
Decision Bias ◽  
Optimal Order Quantity ◽  
Opportunity Loss ◽  
Order Quantities

To study the decision bias in newsvendor behavior, this paper introduces an opportunity loss minimization criterion into the newsvendor model with backordering. We apply the Conditional Value-at-Risk (CVaR) measure to hedge against the potential risks from newsvendor’s order decision. We obtain the optimal order quantities for a newsvendor to minimize the expected opportunity loss and CVaR of opportunity loss. It is proven that the newsvendor’s optimal order quantity is related to the density function of market demand when the newsvendor exhibits risk-averse preference, which is inconsistent with the results in Schweitzer and Cachon (2000). The numerical example shows that the optimal order quantity that minimizes CVaR of opportunity loss is bigger than expected profit maximization (EPM) order quantity for high-profit products and smaller than EPM order quantity for low-profit products, which is different from the experimental results in Schweitzer and Cachon (2000). A sensitivity analysis of changing the operation parameters of the two optimal order quantities is discussed. Our results confirm that high return implies high risk, while low risk comes with low return. Based on the results, some managerial insights are suggested for the risk management of the newsvendor model with backordering.

scholarly journals Raw Material Analysis control of SMBE Slipper Producer using Economic Order Quantity

2021 ◽  
Vol 328 ◽  
pp. 05011
Author(s):  
Sabarudin Ahmad ◽  
Mualim Mualim ◽  
Sugeng Purwoko ◽  
Rifky Yusron
Keyword(s):  
Raw Materials ◽  
Raw Material ◽  
Economic Order Quantity ◽  
Economic Order ◽  
Business Enterprise ◽  
Market Demand ◽  
Order Quantity ◽  
Inventory Models ◽  
Monthly Cost ◽  
Market Requirement

The growth of small-medium business enterprise in Indonesia is getting faster in decade, including small-medium business enterprise who produce slippers. SISCO is one of small-medium business enterprise who produce slipper. They must keep tight with market requirement. The supply of raw materials in a small-medium business enterprise is one of the important during production process. In some case their products are mismatch number from market demand. It can be worse if there a mismatch between raw materials ordering schedule from supplier and market demand from consumers. One of this problem requires Economic Order Quantity method as a solution, because during slippers production we have to order from supplier. Inventories are materials stored as raw materials, then they processed be finish product. To find out inventory, one of the inventory models used is the economic order quantity model. This method seeks to achieve the minimum possibility of inventory levels and lower costs and better quality. Economic Order Quantity method calculation based on raw material inventory control in SISCO slipper brand. Optimum monthly cost is IDR 5.293.541,03 to meet supply materials.

An Interactive Newsvendor Model Involving Market Risk and Product Quality Risk

2013 ◽  
Vol 739 ◽  
pp. 694-699
Author(s):  
I Ping Huang ◽  
Chiuh Cheng Chyu
Keyword(s):  
Product Quality ◽  
Wholesale Price ◽  
Market Price ◽  
Profit Sharing ◽  
Sensitivity Analyses ◽  
Model Parameters ◽  
Market Demand ◽  
Order Quantity ◽  
Demand Distribution ◽  
Quality Risk

This paper presents an interactive profit sharing mechanism for a newsvendor supply chain problem considering both market demand uncertainty and product quality risk. The supplier decides wholesale price, and based on this price, the retailer responds with a market price and an order quantity that optimizes his expected total profit. It is assumed that the retailer fully understands how the market price influences the mean of the market demand distribution. The supplier earns his profit from the order quantity, but will bear the cost of defective products delivered to customers. On the other hand, the retailer bears market risks such as overage cost and shortage cost. To reduce the quality risk, the supplier will employ a Bayesian double sampling inspection plan to minimize product quality cost. An illustrative example is presented to describe the proposed model. Sensitivity analyses of the model parameters are also included.

scholarly journals Optimal order policy for deteriorating items in response to temporary price discount linked to order quantity

2009 ◽  
Vol 40 (4) ◽  
pp. 383-400 ◽  
Author(s):  
Liang-Yuh Ouyang ◽  
Chih-Te Yang ◽  
Hsiu-Feng Yen
Keyword(s):  
Cost Saving ◽  
Optimal Solution ◽  
Deteriorating Items ◽  
Optimal Order ◽  
Market Demand ◽  
Order Quantity ◽  
Price Discount ◽  
Total Cost ◽  
Holding Cost ◽  
Special Order

This paper investigates the possible effects of a temporary price discount offered by a supplier on a retailer's replenishment policy for deteriorating items, whereby the price discount rate depends on the order quantity. The purpose of this study is to develop a decision process for retailers to assist in determining whether to adopt a regular or special order policy. Furthermore, the optimal quantity of a special order policy for a selected case is determined by maximizing the total cost saving between special and regular orders for the duration of the depletion time. This research establishes an algorithm to determine the optimal solution and utilizes several numerical examples to illustrate the theoretical results and subsequently conducts a sensitivity analysis of the optimal solution with respect to the main parameters. Finally, the results reveal that (1) the optimal special order quantity is determined by trading off the benefits of the price discount against the additional holding cost, (2) the retailer benefits in terms of total cost saving if the remnant inventory is as low as possible when adopting a special order policy, (3) for the retailer it is preferable to adopt the special order policy if the unit purchase cost, market demand rate and/or ordering cost increase, and (4) the retailer will order a lower quantity and the total cost saving will decrease when either the holding cost rate or deterioration rate is high. Thus, this study provides the basis for enterprises to make inventory decisions.

Study on Ordering Policy of Home Electronics Retailers under the Uncertain Quality Case in the Supply Chain

2011 ◽  
Vol 230-232 ◽  
pp. 486-490
Author(s):  
Xin Ma
Keyword(s):  
Optimal Order ◽  
Market Demand ◽  
Order Quantity ◽  
Analysis Method ◽  
Ordering Policy ◽  
Quantitative Analysis Method ◽  
Demand Volatility ◽  
Quality Of Supply ◽  
The Impact

Home electronics is short-cycle product with time-sensitive, the market demand volatility and large features and the unreliable environment of supply caused by a variety of uncertain factors. The value of the home electronics will become very low or even lost if it is over more than life cycle. The unreliability home electronics quality of supply is analyzed using quantitative analysis method, the impact of the maximum expected profit and the optimal order quantity of the home electronics retailer by defect rates and customers claim were also discussed in this paper.

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