Advertisingisveryimportantforthenew

Advertisingisveryimportantforthenewsboyproblembecausetheshelf-lifeofthenewsboyproductis
shortandadvertisingmayincreasesalestoavoidoverstocking.Inthispaper,modelstostudytheeffectof
advertisingaredevelopedforthedistribution-freenewsboyproblemwhereonlythemeanandvariance
of thedemandareknown.Asin KhoujaandRobbins (2003), itisassumedthatthemeandemandisan
increasingandconcavefunctionofadvertisingexpenditure.Threecasesareconsidered:(1)demandhas
constantvariance,(2)demandhasconstantcoefficientofvariation,and(3)demandhasanincreasing
coefficientofvariation.Thispaperprovidesclosed-formsolutionsorstepstosolvetheproblem.
Numericalresultsofthemodelarealsocomparedwiththosefromotherpapers.Theeffectsofmodel
parametersonoptimalexpenditureonadvertising,optimalorderquantity,andthelowerboundon
expectedprofitarederivedordiscussed.