Optimal business hours of the newsvendor problem for retailers



This paper proposes a new model for the classical newsvendor problem (NVP), focusing on retailers to discuss an optimal number of business hours per day as well as an optimal stocking quantity. The proposed model assumes that customers’ residences are uniformly distributed over the Hotelling unit interval, and individual customers depart from their residences for the store at a finite velocity. Each individual customer can purchase a single product only if she arrives at the retailer's store during business hours and if there still remain products on her arrival. Under these circumstances, this study explores the existence of an optimal strategy for the retailer—an optimal stocking quantity along with an optimal number of business hours. Numerical examples are also provided to illustrate the theoretical underpinnings of the proposed model formulation.