RANDOM DEMANDS: OPTIMUM LOT SIZE AND THE NEWSBOY PROBLEM

Abstract

The determination of the optimum lot size is a stochastic problem because of the randomness of the demands. The usual approaches consider that the involved distributions are known. We consider the case in which they are unknown. The optimization problem is probabilistic constraint program. The demands are modeled by an autoregressive process and the needed quantiles are derived. The
newsboy problem is revisited using the derived results