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A New Proof for the Tight Range of Optimal Order Quantities for the Newsboy Problem with Mean and Standard Deviation
Department of Management and Marketing, Jennings A. Jones College of Business, Middle Tennessee State University, Murfreesboro, USA
- 1 Department of Management and Marketing, Jennings A. Jones College of Business, Middle Tennessee State University, Murfreesboro, USA
American Journal of Operations Research·Volume 02 (2012)·Pages 203–206·Published 20 June 2012·DOI10.4236/ajor.2012.22023
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Abstract
In the classical Newsboy problem, we provide a new proof for the tight range of optimal order quantities for the newsboy problem when only the mean and standard deviation of demand are available. The new proof is only based on the definition of the optimal solution therefore it is the most straightforward method. It is also shown that the classical Scarf’s rule is the mid-point of the range of optimal order quantities. This provides an additional understanding of Scarf’s order rule as a distribution free decision.
KeywordsNewsboy ProblemDistribution-Free ApproachOptimal Decision
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