An efficient heuristic for the multi‐item newsboy problem with a single constraint

Abstract

Abstract This article treats the problem of determining optimal and approximately optimal order quantities for a multiple‐item inventory system subject to a single constraint on space or budget. Although this problem can be solved by the usual method of Lagrange multipliers, we wish to consider a more efficient scheme that requires fewer computations. We provide calculations that compare and contrast four approximation techniques. In particular, we have discovered a method that yields a direct algebraic expression of the problem parameters for allocation and achieves an expected profit within 90% of the optimal in about 90% of the cases tested.

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