Exact, approximate, and generic iterative models for the multi-product Newsboy problem with budget constraint

Abstract

Because of the increased importance of inventory control/management in today's supply chain environment, we revisit the seminal work of Hadley and Whitin; that is the multi-product Newsboy problem with budget constraint. In this paper, we present exact solution formulae when the demand probability density function is uniform and generic iterative method (GIM), which yields optimum, or near optimum, solution for general continuous density functions of the demand. A salient feature of GIM is that as it progresses, one can compute the error allowing the user to stop when the desired level of accuracy is achieved. Illustrative examples are given in order to show the application of the proposed models. © 2003 Elsevier B.V. All rights reserved.