A generalized newsboy problem with purchase timing

Abstract

This paper deals with the simultaneous determinations of optimal purchase timing and optimal order quantity at a purchase price discount in a generalized newsboy problem. It is assumed that the distribution of the demand with a decreasing variance over the time represents the forecasting ability of the buyer. Thus, in addition to the well-known tradeoffs associated with stocking products under uncertain spot demand, there is an additional tradeoff associated with the purchase cost depending on the purchase timing. A model is proposed, and the solutions are interpreted and compared for some particular set of parameter values.