## MCDM'16 - paper no. 2

#### BICRITERIA OPTIMIZATION IN THE NEWSVENDOR PROBLEM WITH EXPONENTIALLY DISTRIBUTED DEMAND

##### Milena Bieniek

###### Abstract:

In this paper exponential distribution is implemented as a demand distribution in newsvendor model with two different and conflicting goals. The first goal is the standard objective of maximization of the expected profit. The second one is to maximize the probability of exceeding the expected profit, called survival probability. Using exponential distribution as the demand distribution allows us to obtain the exact solutions. Also for this distribution we can study the monotonicity of survival probability with respect to various model parameters analytically. Additional results are obtained when various sets of the parameters are considered. Finally, the bicriteria index which combines these conflicting objectives is optimized which gives the compromise solution. Moreover, in order to illustrate theoretical results, we present numerical examples and graphs of auxiliary functions.

###### Keywords:

stochastic demand, newsvendor problem, bicriteria optimization.

###### Reference index:

Milena Bieniek, (2016), BICRITERIA OPTIMIZATION IN THE NEWSVENDOR PROBLEM WITH EXPONENTIALLY DISTRIBUTED DEMAND, *Multiple Criteria Decision Making* (11), pp.
20-35

###### Full text:

###### Scopus citations in 1 paper(s):

- Gaspars-Wieloch, H. (2017). A decision rule based on goal programming and one-stage models for uncertain multi-criteria mixed decision making and games against nature. Croatian Operational Research Review, 8(1), 61-76. doi:10.17535/crorr.2017.0004