A binary solution method for the multi-product newsboy problem with budget constraint |
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| Authors: | Bin Zhang Xiaoyan Xu Zhongsheng Hua |
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| Affiliation: | 1. School of Management, University of Science and Technology of China, Hefei, Anhui 230026, PR China;2. Lingnan College, Sun Yat-sen University, Guangzhou 510275, PR China;1. School of MAE, Nanyang Technological University, Singapore;2. Google Inc., Mountain View, CA, USA;1. School of Mechanical and Electrical Engineering, Wuhan Textile University, Wuhan 430073, China;2. School of Computer Science and Technology, Huazhong University of Science and Technology, Wuhan 430074, China;3. School of Management, Tianjin University, Tianjin 300072, China;1. School of Economics and Management, Beihang University, Beijing 100191, China;2. School of Business Administration, South China University of Technology, Guangzhou 510640, China;3. Department of Industrial and Operations Engineering, University of Michigan, Ann Arbor, MI 48109, USA |
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| Abstract: | Multi-product newsboy problem (MPNP) with budget constraint is a classical inventory control/management problem. However, solution methods for MPNP under general demand distributions are limited in the current literature. In this paper, by analyzing properties of the optimal solution to the MPNP with a budget constraint, we develop a solution algorithm for the constrained MPNP. The proposed algorithm is binary in nature, and is applicable to general types of demand distribution functions, discrete as well as continuous. For continuous demand distribution function, our approach can obtain the optimal or near optimal solution to the constrained MPNP with polynomial computation complexity of the o(n) order. On the other hand, for discrete demand distribution functions, it can effectively provide good approximate solution. Numerical experiments are presented to show the performance of our method. |
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