Abstract
To mitigate the uncertainty of price and demand, we study a newsvendor model with futures trading. A profit maximization model and a utility maximization model have been established. Both optimal order quantities can be determined. We characterize the property of the optimal solutions for the two maximization problems and show that the retailer will prefer to purchase fewer products for the maximal utility than for the maximal profit. Extended models considering the salvage value of inventory are also studied. Numerical experiments validated the effectiveness of the models.
| Original language | English |
|---|---|
| Title of host publication | Proceedings of the 28th Chinese Control and Decision Conference, CCDC 2016 |
| Publisher | Institute of Electrical and Electronics Engineers Inc. |
| Pages | 5986-5990 |
| Number of pages | 5 |
| ISBN (Electronic) | 9781467397148 |
| DOIs | |
| Publication status | Published - 3 Aug 2016 |
| Externally published | Yes |
| Event | 28th Chinese Control and Decision Conference, CCDC 2016 - Yinchuan, China Duration: 28 May 2016 → 30 May 2016 |
Publication series
| Name | Proceedings of the 28th Chinese Control and Decision Conference, CCDC 2016 |
|---|
Conference
| Conference | 28th Chinese Control and Decision Conference, CCDC 2016 |
|---|---|
| Country/Territory | China |
| City | Yinchuan |
| Period | 28/05/16 → 30/05/16 |
Keywords
- Futures Trading
- Newsvendor Model
- Profit
- Utility
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Chen, Y., Song, S., & Zhang, Y. (2016). The newsvendor model with futures trading. In Proceedings of the 28th Chinese Control and Decision Conference, CCDC 2016 (pp. 5986-5990). Article 7532070 (Proceedings of the 28th Chinese Control and Decision Conference, CCDC 2016). Institute of Electrical and Electronics Engineers Inc.. https://doi.org/10.1109/CCDC.2016.7532070