This paper proposes a novel formulation of the fuzzy newsvendor problem for inventory management applications. This new formulation allows the use of any profit function. A new credibility estimation is proposed to explore the neighborhood around the most impactful demand scenarios. Further, a simulation procedure was designed for the different demand scenarios, which allows the comparison of the proposed approach with probabilistic demand curves. The fuzzy newsvendor problem is solved using a modified genetic algorithm (GA), where an initialization mechanism with null values is proposed. The new formulation of the fuzzy newsvendor problem together with the modified GA have shown to improve the average profit up to 55% in problems with low-budget scenarios.

In this paper, we consider a manufacturer who produces and sells a kind of innovative product in the monopoly market environment. Because the life cycle of innovative product is usually shorter than its procurement lead time, one unique demand quantity (scenario) will occur in the selling season, thus there is only one chance for the manufacturer to determine both optimal production quantity and optimal sale price. Considering this one-time feature of such a decision problem, a price-setting newsvendor model for innovative products is proposed. Different to the existing price-setting newsvendor models, the proposed models determine the optimal production quantity and sale price based on some specific state (scenario) which is most applicable for the manufacturer. The theoretical analysis provides managerial insights into the manufacturers’ behaviors in a monopoly market of an innovative product and several phenomena in the luxury goods market are well explained.