This paper considers an extension of the classical newsboy problem where a stochastic price-demand relationship exists for the product. First presented is a versatile approach capable of modeling price-demand relationships of various levels of complexities. Solution procedures are then presented for different optimization objectives. For the simplest price-demand relationship, analytical solutions are obtainable. For other cases, very efficient numerical procedures are developed.
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Lau et al. (1988) studied this question.
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