The newsvendor problem with advertising: an overview with extensions

The newsvendor problem with advertising: an overview with extensions The effect of advertising on sales has been the subject of recent studies as an important aspect in many demand-based problems. Herein, we deal with the newsvendor problem, due to its simple structure, as a suitable tool for illustrating how facets of marketing may affect decision-making concerning operational problems. In the setting presented, the newsvendor is faced with advertising-sensitive stochastic demand, where a demand-related random element comprises an advertising decision of the multiplicative or additive form. We assume that a suitable advertising strategy results in increased sales. Two advertising response functions are considered, these being concave downward and S-shaped. We review and extend the existing results relating to the newsvendor problem with marketing effects, which mostly pertain to the concave function. These are generalized by defining the S-shaped function, and some original insights into the effect of advertising are given. We establish that the optimal advertising expenditure for the multiplicative case is always less than or equal to the optimal amount in the equivalent deterministic model while it is always equal in the additive case. We finally illustrate the results that are obtained by providing numerical examples involving various advertising response functions, as well as management-related interpretations. Review of Managerial Science Springer Journals

The newsvendor problem with advertising: an overview with extensions

Loading next page...
Springer Berlin Heidelberg
Copyright © 2016 by Springer-Verlag Berlin Heidelberg
Business and Management; Business and Management, general; Accounting/Auditing; Banking; Marketing; Business Strategy/Leadership
Publisher site
See Article on Publisher Site


You’re reading a free preview. Subscribe to read the entire article.

DeepDyve is your
personal research library

It’s your single place to instantly
discover and read the research
that matters to you.

Enjoy affordable access to
over 12 million articles from more than
10,000 peer-reviewed journals.

All for just $49/month

Explore the DeepDyve Library

Unlimited reading

Read as many articles as you need. Full articles with original layout, charts and figures. Read online, from anywhere.

Stay up to date

Keep up with your field with Personalized Recommendations and Follow Journals to get automatic updates.

Organize your research

It’s easy to organize your research with our built-in tools.

Your journals are on DeepDyve

Read from thousands of the leading scholarly journals from SpringerNature, Elsevier, Wiley-Blackwell, Oxford University Press and more.

All the latest content is available, no embargo periods.

See the journals in your area

Monthly Plan

  • Read unlimited articles
  • Personalized recommendations
  • No expiration
  • Print 20 pages per month
  • 20% off on PDF purchases
  • Organize your research
  • Get updates on your journals and topic searches


Start Free Trial

14-day Free Trial

Best Deal — 39% off

Annual Plan

  • All the features of the Professional Plan, but for 39% off!
  • Billed annually
  • No expiration
  • For the normal price of 10 articles elsewhere, you get one full year of unlimited access to articles.



billed annually
Start Free Trial

14-day Free Trial