Title: A knapsack approach to solving the capacitated newsvendor problem

Authors: Pinyuan Shan; Layek Abdel-Malek

Addresses: Department of Mechanical and Industrial Engineering, New Jersey Institute of Technology, Newark, NJ 07102, USA ' Department of Mechanical and Industrial Engineering, New Jersey Institute of Technology, Newark, NJ 07102, USA

Abstract: The capacitated newsvendor problem continues to receive considerable attention. This is attributed to its wide range of applications. In the past few decades, researchers have proposed many solution methods. Nevertheless, these methods often require users to have knowledge in certain mathematical programming techniques or complex computer programs which are not easy to apply. To complement the existing literature in this area, this paper, which is a sister to the one that has been published in Springer Nature Operations Research Forum (Abdel-Malek et al., 2020) where a constructive approach utilising the known minimum cost network, is developed. In this work, we add to the previous methods by introducing a model that utilises the known knapsack problem to optimise its solution. Numerical experiments are conducted to compare the performance of some existing methods including those yielded by its sister paper to the proposed one. Managerial insights are also provided.

Keywords: inventory control; newsvendor problem; knapsack problem; supply chain management; stochastic optimisation.

DOI: 10.1504/IJSCIM.2023.131542

International Journal of Supply Chain and Inventory Management, 2023 Vol.4 No.2, pp.134 - 151

Received: 17 May 2021
Accepted: 04 Aug 2021
Published online: 19 Jun 2023 *