Stochastic programming for decentralized newsvendor with transshipment

Nichalin S. Summerfield, Moshe Dror

Research output: Contribution to journalArticle

13 Citations (Scopus)

Abstract

This paper discusses a family of two-stage decentralized inventory problems using a unifying framework (taxonomy) depicted as a multilevel graph. This framework allows us to model and link different problems of competing retailers who independently procure inventory in response to uncertain demand and anticipated inventory decisions of other retailers. In this family of problems, in the ex-post stage, the retailers exercise recourse actions in response to the realized demand and competitors chosen procurement levels. For example, retailers could coordinate inventory transshipment to satisfy shortage with overage based on profit sharing agreements. Our framework provides a unifying parsimonious view using a single methodological prism for a variety of problems. Equally importantly, as recourse options are laid out, our framework clarifies and contributes a modeling connection between problems in a clear taxonomy of models. This unifying perspective explicitly links work that appeared in isolation and offers future research directions.

Original languageEnglish (US)
Pages (from-to)292-303
Number of pages12
JournalInternational Journal of Production Economics
Volume137
Issue number2
DOIs
StatePublished - Jun 2012

Fingerprint

Stochastic programming
Taxonomies
Prisms
Profitability
Retailers
Transshipment
Newsvendor
Taxonomy

Keywords

  • Cooperative and non-cooperative game
  • Inventory management
  • Stochastic programming

ASJC Scopus subject areas

  • Industrial and Manufacturing Engineering
  • Business, Management and Accounting(all)
  • Management Science and Operations Research
  • Economics and Econometrics

Cite this

Stochastic programming for decentralized newsvendor with transshipment. / Summerfield, Nichalin S.; Dror, Moshe.

In: International Journal of Production Economics, Vol. 137, No. 2, 06.2012, p. 292-303.

Research output: Contribution to journalArticle

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