The Newsboy Model Of Commodity Sales

Newsboy model mainly aims to solve the problem of product’s optimal orderquantity,which helps to seek for the maximal expected profit under stochastic de-mand. What is widely used in real life is the single-period inventory problem, suchas the stock of goods and sales decisions related to daily life. With the rapid de-velopment of science and technology and the diversity of consumer’s demands, theupdate of product is accelerating and the life cycle is becoming increasinglyshorter. More and more problems of product sales can be classified as inventorycontrol problem in terms of newsboy model——how should retailers decide theoptimal order quantity of short life cycle products in face of demand uncertainty inorder to achieve the maximal expected profit.This paper mainly takes into account two types of newsboy problem in prod-uct sales. The following are the major contents of the research:(1)The first type studies the newsboy problem of seasonal product sales underbulk discounts provided by suppliers. It mainly concerns about the reorder andresale of seasonal products. It is presumed that commodity demand in the firststage relies on the random variable of price,and the ordering cost applies all-unitquantity discount; in the second stage, demand is a random variable relying onsales price as well as advertising costs. An optimal solution to the model is offeredthrough an analysis of the model.(2)The second type studies the newsboy problem of household appliancesunder the trade-in model. Through deducing and analyzing the model with the goalof maximizing the profit of distributors, the paper finds out the optimal compen-sating price and order quantity under the trade-in model.