Abstract
This paper proposes an explicit algorithm for a newsboy problem with shortage costs dependent on consumers' demands derived from a fuzzy reasoning method. The newsboy problem is the most standard and important problem in inventory problems, and it is widely used in practical production companies and supply chain networks. However, it is difficult to set the shortage cost as a fixed value due to word of mouth and psychological aspects of consumer and decision maker. On the other hand, the decision maker has some rules to the shortage cost. Therefore, in order to set the shortage cost appropriately considering the above-mentioned cases, the fuzzy reasoning method, particularly the Product-Sum-Gravity method, is introduced, and the explicit optimal condition of the proposed model is obtained. Furthermore, by comparing the proposed model with previous models, some features of the proposed model are also obtained.
