Browsing by Subject "Newsvendor model"

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Open Access
Analysis and applications of replenishment problems under stepwise transportation costs and generalized wholesale prices
(2012) Konur, D.; Toptal, A.
In this study, we analyze the replenishment decision of a buyer with the objective of maximizing total expected profits. The buyer faces stepwise freight costs in inbound transportation and a hybrid wholesale price schedule given by a combination of all-units discounts with economies and diseconomies of scale. This general cost structure enables the model and the proposed solution to be also used for the supplier selection of a buyer under the single sourcing assumption. We show that the buyers replenishment problem reduces to finding and comparing the solutions of the following two subproblems: (i) a replenishment problem involving wholesale prices given by an all-units discount schedule with economies of scale and a lower bound on the replenishment quantity, and (ii) a replenishment problem involving wholesale prices given by an all-units discount schedule with diseconomies of scale and an upper bound on the replenishment quantity. We propose solution methods for these two subproblems, each of which stands alone as practical problems, and utilize these methods to optimally solve the buyers replenishment problem.
Open Access
A newsvendor approach to energy imbalance mechanism in a day ahead electricity market
(2017-06) Çiğdem, Ece
We study an energy imbalance problem in a day ahead electricity market from the perspective of a distribution company. This company commits to buy a certain amount of electricity in the day ahead market the day before the actual demand of its customers is realized and faces energy imbalance due to demand uncertainty. This energy imbalance of the distribution company is penalized by a mechanism which includes penalty parameters de ned by energy market regulatory authorities. By developing a variant of the newsvendor model, we nd the optimal commitment amount of the distribution company and analyze the e ect of penalty parameters on this amount. We show that the way that penalty parameters are selected in current practice may lead the distribution company to underbid. With an empirical analysis performed on real data, we also show that e ect of these penalty parameters could di er hourly, daily, seasonally, regionally and according to sectoral demand pro les. Considering that the traditional policy used to decide on the penalty parameters does not have a systematic approach, in this paper, we present insights for distribution companies on the optimal commitment decision as well as for the energy market regulatory authorities on how to choose the penalty parameters. Keywords: