Robust Optimization for the Newsvendor Problem with Discrete Demand

<div>A plot of the worst-case expected profit <span class="nowrap"><svg height="12.7569pt" id="M147" style="vertical-align:-3.46857pt" version="1.1" viewbox="-0.0498162 -9.28833 23.2481 12.7569" width="23.2481pt" xmlns="http://www.w3.org/2000/svg" xmlns:xlink="http://www.w3.org/1999/xlink"><g transform="matrix(.013,0,0,-0.013,0,0)"><path d="M574 449L545 460C526 432 516 430 487 430C404 430 311 435 226 435C104 435 56 379 25 341L43 318C81 354 121 372 181 372C161 246 87 53 23 3L30 -12C48 -12 88 -4 113 11C157 75 207 248 232 371L386 367L326 109C321 86 318 66 318 50C318 4 339 -12 366 -12C410 -12 461 21 505 69L492 96C467 79 434 60 418 60C406 60 400 78 411 147C422 217 439 300 457 366C487 366 524 367 536 370C547 385 558 408 574 449Z" id="g113-238"></path></g><rect height="0.65243" width="7.71179" x="0" y="2.11387"></rect><g transform="matrix(.013,0,0,-0.013,7.712,0)"><path d="M300 -147C201 -63 143 98 143 270S200 602 300 686L282 710C136 610 70 450 70 271V270C70 89 136 -72 282 -170L300 -147Z" id="g113-41"></path></g><g transform="matrix(.013,0,0,-0.013,12.21,0)"><path d="M474 429L457 433C435 440 389 448 367 448C348 448 323 446 309 443C266 434 195 406 148 366C78 307 23 210 23 101C23 35 55 -12 92 -12C118 -12 146 1 196 35C247 70 311 130 346 173H348L281 -148C268 -211 256 -221 208 -229L191 -232L187 -257L433 -245L437 -219L411 -216C357 -210 350 -205 362 -140L427 207C447 315 461 381 474 429ZM387 387C379 337 363 262 355 236C318 180 201 57 142 57C126 57 112 81 112 128C112 205 150 321 220 376C244 395 280 403 312 403C345 403 370 396 387 387Z" id="g113-114"></path></g><g transform="matrix(.013,0,0,-0.013,18.593,0)"><path d="M275 270C275 450 212 609 64 710L45 686C145 604 203 442 203 270S147 -63 45 -147L64 -170C213 -68 275 89 275 270Z" id="g113-42"></path></g></svg>.</span> PS: <svg height="14.8173pt" id="M148" style="vertical-align:-5.52897pt" version="1.1" viewbox="-0.0498162 -9.28833 74.4007 14.8173" width="74.4007pt" xmlns="http://www.w3.org/2000/svg" xmlns:xlink="http://www.w3.org/1999/xlink"><g transform="matrix(.013,0,0,-0.013,0,0)"><path d="M962 650H739L732 622L760 619C812 613 819 604 798 552C760 457 671 267 606 131H604L511 638H480L237 131H233L183 554C177 607 183 614 226 619L248 622L257 650H24L17 622C88 615 92 611 103 524L173 -11H203L450 491H453L543 -11H575L839 529C882 609 886 613 953 622L962 650Z" id="g113-88"></path></g><g transform="matrix(.013,0,0,-0.013,12.669,0)"><path d="M300 -147C201 -63 143 98 143 270S200 602 300 686L282 710C136 610 70 450 70 271V270C70 89 136 -72 282 -170L300 -147Z" id="g113-41"></path></g><g transform="matrix(.013,0,0,-0.013,17.167,0)"><path d="M536 404C536 423 520 448 491 448C445 448 398 404 308 283L286 338C255 416 242 448 217 448C182 448 138 402 92 341L111 321C149 368 169 378 178 378C188 378 198 363 214 320L254 212C185 117 138 65 107 65C98 65 85 69 82 75C79 82 73 86 65 86C44 86 23 60 23 39C23 7 44 -12 71 -12C119 -12 168 33 265 177L306 61C321 17 347 -12 373 -12C413 -12 465 33 507 96L491 119C459 84 432 60 413 60C395 60 378 92 358 148L321 250C341 279 369 310 389 332C417 363 439 382 456 382C466 382 475 376 481 368C486 361 492 358 496 358C513 358 536 381 536 404Z" id="g113-121"></path></g><g transform="matrix(.0091,0,0,-0.0091,24.369,3.132)"><path d="M250 606C250 634 233 656 203 656C168 656 146 618 146 593C146 564 169 545 192 545C227 545 250 573 250 606ZM227 95L212 119C187 98 152 71 135 71C129 71 128 78 134 102L207 373C219 418 217 451 194 451C165 451 92 411 30 351L44 326C77 353 106 371 114 371C124 371 121 357 117 341L55 97C32 5 46 -12 70 -12C108 -12 191 51 227 95Z" id="g50-106"></path></g><g transform="matrix(.013,0,0,-0.013,27.425,0)"><path d="M95 130C70 130 46 113 46 88C46 72 54 64 59 64C93 55 121 33 121 -3C121 -41 93 -68 44 -88L55 -117C117 -98 186 -56 186 22C186 91 131 130 95 130Z" id="g113-45"></path></g><g transform="matrix(.013,0,0,-0.013,32.568,0)"><path d="M536 404C536 423 520 448 491 448C445 448 398 404 308 283L286 338C255 416 242 448 217 448C182 448 138 402 92 341L111 321C149 368 169 378 178 378C188 378 198 363 214 320L254 212C185 117 138 65 107 65C98 65 85 69 82 75C79 82 73 86 65 86C44 86 23 60 23 39C23 7 44 -12 71 -12C119 -12 168 33 265 177L306 61C321 17 347 -12 373 -12C413 -12 465 33 507 96L491 119C459 84 432 60 413 60C395 60 378 92 358 148L321 250C341 279 369 310 389 332C417 363 439 382 456 382C466 382 475 376 481 368C486 361 492 358 496 358C513 358 536 381 536 404Z" id="g113-121"></path></g><g transform="matrix(.0091,0,0,-0.0091,39.77,3.132)"><path d="M250 606C250 634 233 656 203 656C168 656 146 618 146 593C146 564 169 545 192 545C227 545 250 573 250 606ZM227 95L212 119C187 98 152 71 135 71C129 71 128 78 134 102L207 373C219 418 217 451 194 451C165 451 92 411 30 351L44 326C77 353 106 371 114 371C124 371 121 357 117 341L55 97C32 5 46 -12 70 -12C108 -12 191 51 227 95Z" id="g50-106"></path></g><g transform="matrix(.0091,0,0,-0.0091,42.318,3.132)"><path d="M556 236V289H337V504H275V289H56V236H275V-4H337V236H556Z" id="g54-36"></path></g><g transform="matrix(.0091,0,0,-0.0091,47.878,3.132)"><path d="M389 0V32C297 38 291 46 291 118V635C234 613 175 595 109 583V556L161 554C203 552 207 547 207 497V118C207 46 201 38 110 32V0H389Z" id="g50-50"></path></g><g transform="matrix(.013,0,0,-0.013,52.855,0)"><path d="M95 130C70 130 46 113 46 88C46 72 54 64 59 64C93 55 121 33 121 -3C121 -41 93 -68 44 -88L55 -117C117 -98 186 -56 186 22C186 91 131 130 95 130Z" id="g113-45"></path></g><g transform="matrix(.013,0,0,-0.013,57.998,0)"><path d="M536 404C536 423 520 448 491 448C445 448 398 404 308 283L286 338C255 416 242 448 217 448C182 448 138 402 92 341L111 321C149 368 169 378 178 378C188 378 198 363 214 320L254 212C185 117 138 65 107 65C98 65 85 69 82 75C79 82 73 86 65 86C44 86 23 60 23 39C23 7 44 -12 71 -12C119 -12 168 33 265 177L306 61C321 17 347 -12 373 -12C413 -12 465 33 507 96L491 119C459 84 432 60 413 60C395 60 378 92 358 148L321 250C341 279 369 310 389 332C417 363 439 382 456 382C466 382 475 376 481 368C486 361 492 358 496 358C513 358 536 381 536 404Z" id="g113-121"></path></g><g transform="matrix(.0091,0,0,-0.0091,65.2,3.132)"><path d="M400 606C400 634 383 656 353 656C316 656 294 620 294 593C294 564 317 545 343 545C375 545 400 573 400 606ZM366 351C379 413 381 451 356 451C323 451 251 408 183 341L199 313C223 335 267 365 277 365C285 365 284 354 277 312C245 132 222 27 193 -100C182 -148 160 -188 131 -188C113 -188 90 -178 75 -170C64 -164 55 -168 48 -175C38 -185 24 -203 24 -222S48 -257 71 -257C89 -257 131 -241 186 -192C243 -141 286 -46 310 74L366 351Z" id="g50-107"></path></g><g transform="matrix(.013,0,0,-0.013,69.626,0)"><path d="M275 270C275 450 212 609 64 710L45 686C145 604 203 442 203 270S147 -63 45 -147L64 -170C213 -68 275 89 275 270Z" id="g113-42"></path></g></svg> represents the worst-case distribution consisting of <span class="nowrap"><svg height="9.25202pt" id="M149" style="vertical-align:-3.29111pt" version="1.1" viewbox="-0.0498162 -5.96091 10.3843 9.25202" width="10.3843pt" xmlns="http://www.w3.org/2000/svg" xmlns:xlink="http://www.w3.org/1999/xlink"><g transform="matrix(.013,0,0,-0.013,0,0)"><path d="M536 404C536 423 520 448 491 448C445 448 398 404 308 283L286 338C255 416 242 448 217 448C182 448 138 402 92 341L111 321C149 368 169 378 178 378C188 378 198 363 214 320L254 212C185 117 138 65 107 65C98 65 85 69 82 75C79 82 73 86 65 86C44 86 23 60 23 39C23 7 44 -12 71 -12C119 -12 168 33 265 177L306 61C321 17 347 -12 373 -12C413 -12 465 33 507 96L491 119C459 84 432 60 413 60C395 60 378 92 358 148L321 250C341 279 369 310 389 332C417 363 439 382 456 382C466 382 475 376 481 368C486 361 492 358 496 358C513 358 536 381 536 404Z" id="g113-121"></path></g><g transform="matrix(.0091,0,0,-0.0091,7.202,3.132)"><path d="M250 606C250 634 233 656 203 656C168 656 146 618 146 593C146 564 169 545 192 545C227 545 250 573 250 606ZM227 95L212 119C187 98 152 71 135 71C129 71 128 78 134 102L207 373C219 418 217 451 194 451C165 451 92 411 30 351L44 326C77 353 106 371 114 371C124 371 121 357 117 341L55 97C32 5 46 -12 70 -12C108 -12 191 51 227 95Z" id="g50-106"></path></g></svg>,</span> <span class="nowrap"><svg height="9.36162pt" id="M150" style="vertical-align:-3.40071pt" version="1.1" viewbox="-0.0498162 -5.96091 20.4135 9.36162" width="20.4135pt" xmlns="http://www.w3.org/2000/svg" xmlns:xlink="http://www.w3.org/1999/xlink"><g transform="matrix(.013,0,0,-0.013,0,0)"><path d="M536 404C536 423 520 448 491 448C445 448 398 404 308 283L286 338C255 416 242 448 217 448C182 448 138 402 92 341L111 321C149 368 169 378 178 378C188 378 198 363 214 320L254 212C185 117 138 65 107 65C98 65 85 69 82 75C79 82 73 86 65 86C44 86 23 60 23 39C23 7 44 -12 71 -12C119 -12 168 33 265 177L306 61C321 17 347 -12 373 -12C413 -12 465 33 507 96L491 119C459 84 432 60 413 60C395 60 378 92 358 148L321 250C341 279 369 310 389 332C417 363 439 382 456 382C466 382 475 376 481 368C486 361 492 358 496 358C513 358 536 381 536 404Z" id="g113-121"></path></g><g transform="matrix(.0091,0,0,-0.0091,7.202,3.132)"><path d="M250 606C250 634 233 656 203 656C168 656 146 618 146 593C146 564 169 545 192 545C227 545 250 573 250 606ZM227 95L212 119C187 98 152 71 135 71C129 71 128 78 134 102L207 373C219 418 217 451 194 451C165 451 92 411 30 351L44 326C77 353 106 371 114 371C124 371 121 357 117 341L55 97C32 5 46 -12 70 -12C108 -12 191 51 227 95Z" id="g50-106"></path></g><g transform="matrix(.0091,0,0,-0.0091,9.75,3.132)"><path d="M556 236V289H337V504H275V289H56V236H275V-4H337V236H556Z" id="g54-36"></path></g><g transform="matrix(.0091,0,0,-0.0091,15.31,3.132)"><path d="M389 0V32C297 38 291 46 291 118V635C234 613 175 595 109 583V556L161 554C203 552 207 547 207 497V118C207 46 201 38 110 32V0H389Z" id="g50-50"></path></g></svg>,</span> and <span class="nowrap"><svg height="11.4899pt" id="M151" style="vertical-align:-5.52899pt" version="1.1" viewbox="-0.0498162 -5.96091 11.7544 11.4899" width="11.7544pt" xmlns="http://www.w3.org/2000/svg" xmlns:xlink="http://www.w3.org/1999/xlink"><g transform="matrix(.013,0,0,-0.013,0,0)"><path d="M536 404C536 423 520 448 491 448C445 448 398 404 308 283L286 338C255 416 242 448 217 448C182 448 138 402 92 341L111 321C149 368 169 378 178 378C188 378 198 363 214 320L254 212C185 117 138 65 107 65C98 65 85 69 82 75C79 82 73 86 65 86C44 86 23 60 23 39C23 7 44 -12 71 -12C119 -12 168 33 265 177L306 61C321 17 347 -12 373 -12C413 -12 465 33 507 96L491 119C459 84 432 60 413 60C395 60 378 92 358 148L321 250C341 279 369 310 389 332C417 363 439 382 456 382C466 382 475 376 481 368C486 361 492 358 496 358C513 358 536 381 536 404Z" id="g113-121"></path></g><g transform="matrix(.0091,0,0,-0.0091,7.202,3.132)"><path d="M400 606C400 634 383 656 353 656C316 656 294 620 294 593C294 564 317 545 343 545C375 545 400 573 400 606ZM366 351C379 413 381 451 356 451C323 451 251 408 183 341L199 313C223 335 267 365 277 365C285 365 284 354 277 312C245 132 222 27 193 -100C182 -148 160 -188 131 -188C113 -188 90 -178 75 -170C64 -164 55 -168 48 -175C38 -185 24 -203 24 -222S48 -257 71 -257C89 -257 131 -241 186 -192C243 -141 286 -46 310 74L366 351Z" id="g50-107"></path></g></svg>.</span></div>

Mathematical Problems in Engineering

Robust Optimization for the Newsvendor Problem with Discrete Demand

Figure 3