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Jointly pricing and ordering for a multi-product multi-constraint newsvendor problem with supplier quantity discounts. (English) Zbl 1219.90016

Summary: We present an extension to the multi-product newsvendor problem by incorporating the retailer’s pricing decision as well as considering supplier quantity discount. The objective is to maximize the expected profit of the retailer through jointly determining the ordering quantities and selling prices for the products, subject to multiple capacity constraints. We formulate the problem as a generalized disjunctive programming (GDP) model and develop a Lagrangian heuristic approach for its solution. Randomly produced instances involving up to 1000 products are used to test the proposed approach. Computational results show that the Lagrangian heuristic approach can present very good solutions to all instances in reasonable time.

MSC:

90B05 Inventory, storage, reservoirs
90B06 Transportation, logistics and supply chain management
90C59 Approximation methods and heuristics in mathematical programming
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