Two-product newsboy problem with satisficing objective and independent exponential demands

Abstract

While all previous research on the newsboy problem considered the single-product case, a recently published paper studied a two-product newsboy problem under the objective of maximizing the probability of achieving a profit target. Numerical solutions to this problem reveal some very intriguing properties, but little analytical results were obtained. This paper presents an analytical solution procedure to the problem for the case of exponentially distributed independent demands. Our analytical structure reveals even more intriguing properties, and confirms that the multiproduct extension of the newsboy problem is a very challenging and fruitful research area.