Title: Manufacturing newsvendors and inventory pooling with nonlinear production costs

Authors: Yigal Gerchak

Addresses: Department of Industrial Engineering, Tel-Aviv University, Israel

Abstract: We discuss a manufacturing newsvendor problem with nonlinear production costs. We perform comparative statics with respect to the unit revenue, the production cost function and the demand distribution. We provide several specific examples. Then we analyse inventory pooling between manufacturing newsvendors with nonlinear production costs, which involves comparing joint production to individual production. We illustrate the findings by using examples with demands following i.i.d. uniform and normal distributions.

Keywords: newsvendors; inventory pooling; nonlinear costs; manufacturing industry; newsvendor problem; production costs; unit revenue; demand distribution.

DOI: 10.1504/IJIR.2016.077452

International Journal of Inventory Research, 2016 Vol.3 No.1, pp.70 - 80

Received: 08 Mar 2016
Accepted: 08 Mar 2016
Published online: 30 Jun 2016 *

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