The newsvendor problem with multiple inputs and environment sensitive customers
Author(s)
Advisor
Date
2015Publisher
Bilkent University
Language
English
Type
ThesisItem Usage Stats
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Abstract
Motivated by the global aim and trends to reduce carbon emissions, in this thesis
we investigate the effects of carbon sensitivity on the operations management in
the context of inventory management. We assume the newsvendor setting under
multiple substitutable inputs with varying carbon emission levels, and carbon
sensitive random demand. The Cobb-Douglas production function is used which
provides a link between the production quantity and the inputs. Our goal is
to determine the optimal production quantity under two different supply chain
models. In the decentralized model, we consider an independent manufacturer
and a retailer, where the retailer orders Q units to the manufacturer and the
manufacturer produces these items in such a way that he minimizes his production
cost. In the integrated production or the centralized model, the manufacturer
and the retailer act as a centralized system and the aim is to find the production
quantity that maximizes the expected profit of the integrated system. Exact
expressions for the expected profits of both models are derived and analytical
results regarding the optimal solutions are presented. Numerical results are also
provided to illustrate the effects of the system parameters and carbon sensitivity
levels.
Keywords
NewsvendorEnvironment Sensitive Customers
Carbon Emissions
Inventory Management
Carbon Sensitive Demand
Multiple Inputs
CobbDouglas
Operations Management