Newsboy model with price- and time-sensitive uncertainty demand

Abstract

Time and price are very important factors for demand. Through proposing a sensitive coefficient (named as rho) of market price dependent on wholesale price, this research establishes a random Newsboy model with demand dependent on price and time, and analyzes the relationship among retail price, ordering time and ordering quantities. From theory induction and numerical verification, it proves that there are not global optimal rho, ordering time and quantity maximizing expected profit, but given a rho, the optimal order time and quantity are existent. Indirectly it gets the optimal market price, order time and quantity. Moreover, this study makes random factor of demand conforms to Uniform Distribution, and demonstrates the existence and optimal of expected profit. The conclusion of this research will provide some practical suggestions for decision-maker on how to weigh price, time and quantity.