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| Author: | Reyniers, D. |
| Title: | A high-low search algorithm for a newsboy problem with delayed information feedback. |
| Journal: | Operations Research
1990 : SEP-OCT, VOL. 38:5, p. 838-846 |
| Index terms: | DECISION ANALYSIS SALES FORECASTING DEMAND |
| Language: | eng |
| Abstract: | A new approach to a newsboy problem is considered under demand uncertainty rather than risk. Very often in situations of demand uncertainty, an optimal production or supply level decision has to be made before the most recent demand figures are available. The theoretical underpinning of the model is an extension of the mathematical theory of high-low search. An algorithm is derived to determine a sequence of supply quantities which minimizes total costs of over- and undersupply in the most adverse demand conditions. The value of perfect information is calculated, indicating how much a rational risk averse decision maker would be willing to pay to know demand exactly. |
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