A newsboy problem considering reservation policywith fuzzy demand

Reservation policies are usually adopted for marketing purposes in environments with uncertain demand. This paper examines reservation policy in newsboy-type inventory models with fuzzy demand. A discount rate is often used to motivate potential customers to use the reservation option. The willingness rate is defined as a function of the discount rate, and calculated as the proportion of potential customers who make reservations at the discount rate. Based on different types of customers, the corresponding willingness functions can he established. This paper suggests a procedure for finding the optimal discount rate and total order quantity to achieve the optimal total profit. Considering willingness functions due to various types of customer, numerical examples with two parameter sets are used to demonstrate the applicability of the proposed models. The results show that the newsboy model that considers reservation policy with fuzzy demand can achieve greater total profit than that obtained using the classical newsboy model.