Barter exchange as the way to deal with excess inventory: newsvendor problem with multiplicative demand

• Authors: BIENIEK Milena
• Languages of publication: EN

Abstracts

EN

Barter exchange has been growing in popularity during the coronavirus pandemic. This article considers bartering introduced to the newsvendor model with multiplicative demand. The objective of the model is to specify the order quantity and retail price to maximize the expected profit. We distinguish cases with the co-movement of prices of exchanged products and without it. In the first case, we calculate a precise optimal solution to the problem. In the latter case, we prove the existence of an optimal solution and give the conditions under which it is unique. We examine the sensitivity analysis of the results which is illustrated in numerical examples. The analysis revealed that the greater the commission, the lower the optimal profit. We make a conclusion that barter exchange can help the retailer to improve the profit.

Keywords

EN

barter exchange; inventory; newsvendor; pricing; multiplicative demand

• Publisher: Politechnika Wrocławska. Oficyna Wydawnicza Politechniki Wrocławskiej
• Journal: Operations Research and Decisions
• Year: 2022
• Volume: 32
• Issue: 3
• Pages: 49-64

Contributors

author

BIENIEK Milena

• Faculty of Economics, Institute of Management and Quality Sciences, Maria Curie-Sklodowska University, Lublin, Poland

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Identifiers

DOI

10.37190/ord220304