A hybrid simulation framework for the newsvendor problem with advertising and viral marketing

Research output: Chapter in Book/Report/Conference proceedingConference contribution

7 Scopus citations

Abstract

The newsvendor problem is known as one the classical problems in the inventory management context which has received a great deal of attention during the past few decades. In this paper, a two-level simulation-based framework is proposed, where in the first level, agent-based simulation is developed to model the effect of advertising intensity and word-of-mouth on the demand in order to estimate the demand distribution under various levels of advertising intensity. The results from the agent-based model are then plugged into a Monte Carlo simulation model in order to make the final decision on the optimal advertising intensity and economical order quantity with the objective to maximize the expected profit. The proposed approach is then applied to a hypothetical newsvendor problem to illustrate its applicability as a decision support tool for solving real-world newsvendor problems.

Original languageEnglish (US)
Title of host publicationProceedings of the 2013 Winter Simulation Conference - Simulation
Subtitle of host publicationMaking Decisions in a Complex World, WSC 2013
Pages1613-1624
Number of pages12
DOIs
StatePublished - 2013
Event2013 43rd Winter Simulation Conference - Simulation: Making Decisions in a Complex World, WSC 2013 - Washington, DC, United States
Duration: Dec 8 2013Dec 11 2013

Publication series

NameProceedings of the 2013 Winter Simulation Conference - Simulation: Making Decisions in a Complex World, WSC 2013

Other

Other2013 43rd Winter Simulation Conference - Simulation: Making Decisions in a Complex World, WSC 2013
CountryUnited States
CityWashington, DC
Period12/8/1312/11/13

All Science Journal Classification (ASJC) codes

  • Modeling and Simulation

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  • Cite this

    Negahban, A. (2013). A hybrid simulation framework for the newsvendor problem with advertising and viral marketing. In Proceedings of the 2013 Winter Simulation Conference - Simulation: Making Decisions in a Complex World, WSC 2013 (pp. 1613-1624). [6721544] (Proceedings of the 2013 Winter Simulation Conference - Simulation: Making Decisions in a Complex World, WSC 2013). https://doi.org/10.1109/WSC.2013.6721544