Global Robust Newsvendor Operation Strategy for a Two-Market Stochastic Inventory System

Abstract

Global markets increase sales and profitability opportunities for enterprises, but more environmental uncertainty poses new challenges for operational planning. This paper attempts to introduce the idea of distributionally robust optimization into the global operation problem of a two-market stochastic inventory system, providing theoretical guidance and reference decision-making for enterprises to optimize and configure in a global market with non-overlapping geographic locations and sales seasons. We find that the demand correlation and the lack of demand information will not substantially affect the operation strategy, and the enterprise’s industrial chain and supply chain remain stable. However, reducing inter-market tariffs or logistics costs will lead to a change in strategy, and the existence of the secondary market will lead to more capacity planning in the primary market. In addition, we find that enterprises’ transshipment strategies rely significantly on exchange rate volatility. Numerical experiments were conducted to demonstrate our theoretical results.