Abstract
In this paper, we study the optimal policies of retailers who operate their inventory with a single period model (i.e.; newsvendor model) under a free shipping offer where a fixed shipping fee is exempted if an order quantity is greater than or equal to a given minimum quantity. Zhou et al. (2009) have explored this model, and we further investigate their analysis for the optimal ordering policies which they did not sufficiently develop. Based on the investigation, we extend the base model in order to deal with the practically important aspect of inventory management when the exact distribution function of demand is not available. We incorporate the aspect into the base model and present the optimal policies for the extended model with a numerical example. Finally, we conduct extensive numerical experiments to evaluate the performance of the extended model and analyze the impacts of minimum free shipping quantity and the fixed shipping fee on the performance.
| Original language | English |
|---|---|
| Pages (from-to) | 234-240 |
| Number of pages | 7 |
| Journal | European Journal of Operational Research |
| Volume | 232 |
| Issue number | 1 |
| DOIs | |
| Publication status | Published - 2014 Jan 1 |
| Externally published | Yes |
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Keywords
- Distribution free
- Free shipping
- Newsvendor model
ASJC Scopus subject areas
- Modelling and Simulation
- Management Science and Operations Research
- Information Systems and Management
Cite this
A minimax distribution-free procedure for a newsvendor problem with free shipping. / Kwon, Kysang; Cheong, Tae Su.
In: European Journal of Operational Research, Vol. 232, No. 1, 01.01.2014, p. 234-240.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - A minimax distribution-free procedure for a newsvendor problem with free shipping
AU - Kwon, Kysang
AU - Cheong, Tae Su
PY - 2014/1/1
Y1 - 2014/1/1
N2 - In this paper, we study the optimal policies of retailers who operate their inventory with a single period model (i.e.; newsvendor model) under a free shipping offer where a fixed shipping fee is exempted if an order quantity is greater than or equal to a given minimum quantity. Zhou et al. (2009) have explored this model, and we further investigate their analysis for the optimal ordering policies which they did not sufficiently develop. Based on the investigation, we extend the base model in order to deal with the practically important aspect of inventory management when the exact distribution function of demand is not available. We incorporate the aspect into the base model and present the optimal policies for the extended model with a numerical example. Finally, we conduct extensive numerical experiments to evaluate the performance of the extended model and analyze the impacts of minimum free shipping quantity and the fixed shipping fee on the performance.
AB - In this paper, we study the optimal policies of retailers who operate their inventory with a single period model (i.e.; newsvendor model) under a free shipping offer where a fixed shipping fee is exempted if an order quantity is greater than or equal to a given minimum quantity. Zhou et al. (2009) have explored this model, and we further investigate their analysis for the optimal ordering policies which they did not sufficiently develop. Based on the investigation, we extend the base model in order to deal with the practically important aspect of inventory management when the exact distribution function of demand is not available. We incorporate the aspect into the base model and present the optimal policies for the extended model with a numerical example. Finally, we conduct extensive numerical experiments to evaluate the performance of the extended model and analyze the impacts of minimum free shipping quantity and the fixed shipping fee on the performance.
KW - Distribution free
KW - Free shipping
KW - Newsvendor model
UR - http://www.scopus.com/inward/record.url?scp=84882906698&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84882906698&partnerID=8YFLogxK
U2 - 10.1016/j.ejor.2013.07.004
DO - 10.1016/j.ejor.2013.07.004
M3 - Article
AN - SCOPUS:84882906698
VL - 232
SP - 234
EP - 240
JO - European Journal of Operational Research
JF - European Journal of Operational Research
SN - 0377-2217
IS - 1
ER -