Stochastic Model for Newsvendor Problem

Liza Setyaning Pertiwi, Jhonny Marbun, Christian Sinaga

Abstract: In this paper newsvendor model extensions are developed. These two extensions allow modelling of the situations where there are certain percentage of customers who are willing to wait for the next regular order. The first model assumes that it is possible to identify customers who are willing to wait for the next regular order at the beginning of planning period, while the second model assumes back order option at time when stock out occurs.

Keywords: Inventory, Newsvendor Model, Stochastic Model