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Can I read Multi-location newsvendor problem with random yield: Centralization versus decentralization on EtoBox?
Multi-location newsvendor problem with random yield: Centralization versus decentralization by Li Xiao; Ce Wang is a Business, Management and Accounting article available to read on EtoBox.
What is Multi-location newsvendor problem with random yield: Centralization versus decentralization about?
We study a multi-location newsvendor problem with an additive or multiplicative random yield assumption. We derive the expected cost and variance of cost under both centralized and decentralized systems. Given the additive random yield, we show that centralization is better than decentralization if demand is deterministic, or demand is uncertain and service level is 0.5. This result is driven by the risk pooling effect, where risk refers to supply risk. Given the multiplicative random yield, we show that decentralization is better than centralization if demand is deterministic. This result is driven by the risk diversification effect, where risk refers to supply risk. Through numerical experiments, we find that in general there is no risk pooling effect nor risk diversification effect if demand is uncertain. Specifically, under additive random yield the cost variance of centralized system can be either higher or lower than the decentralized system. Under multiplicative random yield, centralization is better than decentralization in terms of the expected cost, while decentralization is better than centralization in terms of the cost variance. Both the analytical and numerical result
Who reads Multi-location newsvendor problem with random yield: Centralization versus decentralization?
It is typically read by researchers, students, and practitioners in Business, Management and Accounting.
- Author
- Li Xiao; Ce Wang
- Publisher
- Elsevier BV
- Published
- 2023
- Language
- EN
- Field
- Business, Management and Accounting (Social Sciences)