The Newsvendor Problem from A Press Distributor Viewpoint

Abstract

Newsvendor problem is usually considered from the selling point interests. The editor cannot optimize his profits without full information about the distribution at each point. The distributors generally use heuristic methods, based on their market knowledge and of past experiences. The assignment of supply to each point is based on optimization profits or costs, or, alternatively, trough hybrid time series methods. This allows generating a disaggregated estimation on global supply based on the editor policy about the maximum desired proportion of unsold copies and of outlets that run out of stock. This methodology permits an increase of productivity in the staff in charge of the distribution’s decisions can, introducing objective criteria for the assignment of services through a network of selling points. The total run out decided by the editor implies modifications in the decisions of the assignment process, in accordance with the distributor’s business objectives.
Keywords: Cost benefits analysis, Distribution optimization, Newsvendor problem