Newsvendors tackle the newsvendor problem

摘要

Most of the 200 magazine wholesalers servicing retailers are organized into four groups. The leading 200 retail chains account for over 80% of all magazine sales. Publishers tend to lose most from inefficient distribution since the unsold product is taken back for a refund. Interviews with managers often provided conflicting reasons for their allocation decisions. Biased allocations were seen with some stores that either sold out almost every issue of a magazine or some stores that constantly sold only a small fraction of their allocations. In 1998, the management of Tune Inc. reviewed its newsstand distribution principles and procedures for its magazines. The review focused on three major distribution decisions: 1. The evaluation of each magazine's print order D, i.e., the total number of copies printed and shipped. 2. The wholesaler allotment procedure. 3. The store distribution process. Formal solutions were adapted so that they can be implemented within the constraints of the distribution channels. The paper describes details of TDMP and reports incremental profits in excess of $3.5 million annually.