A novel single-period inventory problem with uncertain random demand and its application

In many real inventory situations of short life cycle products the decision maker often has to provide a subjective estimate of new demand distribution due to the lack of historical data. Thus, both randomness and uncertainty simultaneously appear in a single period inventory (newsboy) problem. In this paper, we develop both single item and multi item single period inventory models when market demands are assumed to be uncertain random variables. The objective of this study is to provide theoretical analysis of the models that attains optimality when demand information availability in subjective judgments leading to uncertainty along with random variation. The uncertain random models are transferred to equivalent deterministic forms by considering expected profit and providing more information of chance distributions. Finally, the numerical examples of ordering pharmaceutical reference standard materials are presented to illustrate the models. (C) 2015 Elsevier Inc. All rights reserved.