The Newsboy Problem With Price-Dependent Demand Distribution

Abstract

Abstract This paper considers an extension of the classical newsboy problem where a stochastic price-demand relationship exists for the product. First presented is a versatile approach capable of modeling price-demand relationships of various levels of complexities. Solution procedures are then presented for different optimization objectives. For the simplest price-demand relationship, analytical solutions are obtainable. For other cases, very efficient numerical procedures are developed.