You are not currently logged in.
Access your personal account or get JSTOR access through your library or other institution:
The Newsboy Problem under Alternative Optimization Objectives
The Journal of the Operational Research Society
Vol. 31, No. 6 (Jun., 1980), pp. 525-535
Stable URL: http://www.jstor.org/stable/2580826
Page Count: 11
Preview not available
In the classical "newsboy problem", one determines the optimum order quantity to maximize the expected profit. This paper considers the newsboy problem under two new objectives. The relevance of the first objective-"maximizing expected utility"-is well established in decision theory. This paper develops a group of formulas for handling the partial moments arising from adopting this objective, and these formulas are potentially useful to many other management models involving partial moments. The second objective-"maximizing the probability of achieving a budgeted profit"-is commonly adopted by managers but largely ignored in the literature. The analysis reveals some interesting results for determining the optimum order quantity under this objective.
The Journal of the Operational Research Society © 1980 Operational Research Society