Journal article
Newsvendor games: convex optimization of centralized inventory operations
TOP, Vol.20(3), pp.707-728
10/01/2012
DOI: 10.1007/s11750-010-0160-x
Abstract
A finite set of outlets with randomly fluctuating demands bands together to reduce costs by buying, storing and distributing their inventory jointly. This is termed inventory centralization and is a type of risk pooling. The expected centralization cost can be lowered even further, without disrupting the demand behavior at individual outlets, by inducing the outlets to correlate their individual demands. Given that the outlets' demands are normally distributed, the lowering of the centralized cost corresponds to a semidefinite optimization problem. This paper establishes a closed-form optimal solution of the semidefinite program and a fair allocation of the centralized cost at optimality.
Details
- Title: Subtitle
- Newsvendor games: convex optimization of centralized inventory operations
- Creators
- Samuel Burer - University of IowaMoshe Dror - University of Arizona
- Resource Type
- Journal article
- Publication Details
- TOP, Vol.20(3), pp.707-728
- Publisher
- Springer Nature
- DOI
- 10.1007/s11750-010-0160-x
- ISSN
- 1134-5764
- eISSN
- 1863-8279
- Number of pages
- 22
- Grant note
- CCR-0203426; CCF-0545514 / NSF; National Science Foundation (NSF)
- Language
- English
- Date published
- 10/01/2012
- Academic Unit
- Business Analytics
- Record Identifier
- 9984380538702771
Metrics
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