On dynamic iterative algorithm and the loss of newsvendor problem
Hao-ran Shi1, 2, Xiaoqing Liu1, Yao Yang1
1School of Energy and Environment, Xihua University, 610039, Chengdu, P.R. China
2School of Transportation and Logistics, Southwest Jiaotong University, 610031, Chengdu, P.R. China
Based on the thinking and method of dynamic programming, this paper calculates the expected profit of every selling cycle of newsvendor by historical data and calculates the expected profit of the second selling cycle by that of the first selling cycle. We will get the optimal purchasing quantity as the expected profit begins to fall. Besides, this paper also discusses the stock loss and gets the optimal purchasing quantity by empirical examples.