A decision support tool for the Newsboy Problem using Visual IFPS/PLUS

Abstract

The intense competition in today's business environment makes it more important than ever for companies to understand the environment in which they operate. There is a need for companies to conduct their business effective and efficiently. Given the significance of inventory in most operations, inventory management represents a key area in which significant improvements can be made. This study is concerned with examining a common investory problem faced by many managers - the newsboy problem. In essence, the newsboy problem is a single period investory problem characterised by a single order opportunity and an uncertain demand. This makes the determination of the optimal order quantity difficult, as holding too much or too little inventory will result in a cost to the company.