Article
Supply Chain Replenishment Decision for Newsvendor
Products with Multiple Periods and a Short Life Cycle
Chun-Chin Wei
1
and Liang-Tu Chen
2,
*
Citation: Wei, C.-C.; Chen, L.-T.
Supply Chain Replenishment
Decision for Newsvendor Products
with Multiple Periods and a Short
Life Cycle. Sustainability 2021, 13,
12777. https://doi.org/10.3390/
su132212777
Academic Editor: Nicholas Chileshe
Received: 8 September 2021
Accepted: 13 November 2021
Published: 18 November 2021
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1
Department of Marketing and Distribution Management, Chien Hsin University of Science and Technology,
Taoyuan City 320, Taiwan; d887801@uch.edu.tw
2
Department of Commerce Automation and Management, National Pingtung University,
Pingtung City 900, Taiwan
* Correspondence: ltchen@mail.nptu.edu.tw; Tel.: +886-8-766-3800
Abstract:
Traditionally, the newsvendor problem is a single-period model for a retailer and can
be applied in the replenishment decision for a product with a short life cycle. However, many
fashionable commodities are seasonal; not all of these products must be sold within a single period
of a selling season, and they can be replenished once in each cycle. This study develops a novel
multi-period model to determine multiple ordering replenishment decisions for a product over a
short selling season. This study not only demonstrates the profit function for a retailer, but also
provides those for both the manufacturer and the entire channel in a supply chain problem. The
proposed multi-period ordering model provides explicit insights into how the ordering decisions of
the retailer are affected in a specific period by considering unsold inventory or unsatisfied demand
from a previous period. A numerical analysis and the simulation results illustrate the feasibility of
the proposed model.
Keywords: supply chain management; inventory management; newsvendor; multiple period
1. Introduction
The newsvendor model is a single-period, single-product model for a retailer and
can be applied in replenishment decisions for a product with a short shelf or demand
life [
1
]. Practical examples are retailers selling seasonal or fashionable goods, newsstands,
and food retailers selling dairy products before their expiration dates. In the conventional
newsvendor problem, the unit selling price, cost, salvage value and shortage penalty of an
inventory item, and the density function of the item’s stochastic demand are assumed to
be known as prior knowledge [
2
,
3
]. The critical property of these products is a deadline
after which selling must stop. The leftover stock becomes worthless if not sold by a specific
deadline. The key issue is that of determining the optimal order quantity under a given
optimization objective for maximizing the retailer’s profit. That is, a retailer must decide
how great of a quantity to order. Many studies have investigated this issue, including those
of Pasternack [4], Lau and Lau [2], and Guo et al. [5].
Many fashionable commodities are seasonal, but not all of these products must be
sold within a single period of a selling season. When a selling season consists of multiple
ordering cycles, the commodities can be replenished once in each cycle. For example,
many shops order computer, communication, consumer electronic, and fashion goods once
a week. Then, determining the ordering quantity for each period in order to maximize
the retailer’s profit during a short selling season is a critical problem. Retailers cannot
accurately forecast market demand and fluctuating product supply; then, either excessive
inventory or product shortages occur, resulting in resource waste or loss of goodwill.
Then, retailers must reduce such risk and increase profits by adopting novel contracts
with suppliers.
Sustainability 2021, 13, 12777. https://doi.org/10.3390/su132212777 https://www.mdpi.com/journal/sustainability
