MULTI-ITEM NEWSVENDOR PROBLEM WITH AN EQUALITY RESOURCE CONSTRAINT

This research addresses a multi-item newsvendor problem with an equality resource constraint. We focus on retail industries with insufficient development power, where shelves must be filled with a variety of goods at the beginning of every period to make the selling space attractive. Technically, the total occupation volume of the goods must be adjusted to the shelf space. Using resource terminology, these elements correspond to resource consumption and resource capacity, respectively. Thus, we consider a constraint in which the total resource consumption is adjusted to a given resource capacity. We derive explicit solutions for several scenarios regarding resource capacity. These give important managerial implications that are helpful for both managers and front-line workers. We also consider two approaches for obtaining an approximate optimal solution for an arbitrary resource capacity, one of which can be implemented with ease in an ordering support system.