Newsvendor or Not? That is the Question



We consider multi-item multi-echelon systems under  stationary stochastic demand. We assume linear holding and penalty costs. Several authors have derived generalized newsvendor equations for such systems. We discuss these results, and their underlying assumptions. We show that in general newsvendor equations do not hold by deriving related cost-balance equations. We discuss the consequences of this results for the relation between costs structures and service measures.
Graduated at the Rijksuniversiteit Leiden, The Netherlands in Mathematics and Economics in 1981 and received a PhD in 1985 from the Free University of Amsterdam. Thereafter he joined the  Centre for Quantitative Methods (CQM) of Philips Electronics in Eindhoven, The Netherlands as consultant in Operations Research. From 1990-1992 he was a teaching professor at Boston University Brussels. In 1990 he was appointed Manager Logistics Innovation of Philips Consumer Electronics.  In 1991 he was appointed part-time professor in Industrial Mathematics at Technische Universiteit Eindhoven. Since 1992 he is a full time professor Operations Management at the same university. He has published over 70 articles in international scientific journals. He is the Director of the European Supply Chain Forum (eSCF). He was a member of the board of VLM (Logistics Management Association) from 1997-2000. From January 1, 2003 till July 1, 2008 he was Scientific Director of the research school Beta. In 2004 he was Edelman Award Finalist as member of the Philips Semiconductors team. In 2006 he received the ISIR Service Award. In September 2008 Ton de Kok became Fellow of the research school Beta. He is Academic Director of the TiasNimbas Executive Master on Operational Excellence and member of the TiasNimbas Academic Council. Since 2007 he is Fellow of TiasNimbas business school. Ton de Kok is head of the capacity group Operations Planning, Accounting, and Control (OPAC) in the department of Industrial Engineering and Innovation Sciences since April 1, 2008.
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Ingrid Waaijer