Sourcing with Random Yields and Stochastic Demand: A Newsvendor Approach | Weatherhead

Sourcing with Random Yields and Stochastic Demand: A Newsvendor Approach

Sourcing with Random Yields and Stochastic Demand: A Newsvendor Approach

Authors

Published

Computers and Operations Research, 12 ed., vol. 34, pp. 3682-3690, December 2007

Website

http:// www.sciencedirect.com/science/article/pii/S0305054806000268

Abstract

We studied a supplier selection problem, where a buyer, while facing random demand, is to decide ordering quantities from a set of suppliers with different yields and prices. We provided the mathematical formulation for the buyer's profit maximization problem and proposed a solution method based on a combination of the active set method and the Newton search procedure. Our computational study shows that the proposed method can solve the problem efficiently, and is able to generate interesting and insightful results that lead us to various managerial implications.