The (σ, S) policy for uncertain multi-product newsboy problem

This paper derives an optimal (σ,S) policy for uncertain multi-product newsboy problem. Demands for the products are estimated by experts and assumed to be independent uncertain variables. Uncertainty theory, which is a new mathematical tool to deal with human uncertainty, is employed to model demand distributions. A fixed setup cost and a linear ordering cost are incurred if products are ordered. Setup cost is variant and depends on whether a joint order or an individual order is placed. A methodology is proposed for determining the optimal (σ,S) policy. Finally, a two-product example is provided to show how to design an optimal (σ,S) policy in realistic situation.