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Newsboy Problem: Viability of Optimal Initial Selling Price andOrdering Policies in the Presence of Exogenous Price Decline and Random LeadTime

Published online by Cambridge University Press:  29 November 2013

Ningombam Sanjib Meitei  and
Snigdha Banerjee
Ningombam Sanjib Meitei
Affiliation:
School of Statistics, Devi Ahilya University, Vigyan Bhawan, Khandwa Road, Indore-452001, India.. sanjibmeiteicha@rediffmail.com; bans1@rediffmail.com
Snigdha Banerjee
Affiliation:
School of Statistics, Devi Ahilya University, Vigyan Bhawan, Khandwa Road, Indore-452001, India.. sanjibmeiteicha@rediffmail.com; bans1@rediffmail.com
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Abstract

Analysis of empirical sales data lead us to consider newsboy model for four practicalmarket conditions arising from the presence/absence of stochastic lead time and exogenouslinear temporal decline in selling price when distribution of the stochastic demanddepends upon initial selling price. Viability of the solutions is discussed for threestrategies of obtaining optimal initial selling price and/or ordering quantity. Numericalstudies are conducted to assess the effects of lead time and price decline.

Keywords

Stochastic lead-timeexogenous price declinepricinginitial selling priceviable policies

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Type
Research Article
Information
RAIRO - Operations Research , Volume 47 , Issue 4 , September 2013 , pp. 371 - 394
Copyright
© EDP Sciences, ROADEF, SMAI 2013

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