A newsboy problem with a simple reservation arrangement

Newsboy problems have always been an important issue in inventory management. A number of methods have been proposed to solve such problems based on different objectives or considerations. Different from the existing studies, this paper presents a newsboy model with a simple reservation arrangement by introducing the willingness rate, represented as the function of the discount rate, into the models. Mathematical models are developed, and the solution procedure is derived for determining the optimal discount rate and the optimal order quantity. Through the numerical example, we demonstrated the varied profits yielded from the models considering the reservation arrangement, depending on the number of consumers who accept the reservation policy. The profits derived are greater than those from the classical newsboy model, due to the consideration of the reservation.