Newsvendors Tackle the Newsvendor Problem

In 1998, the retail sales and marketing division of Time Inc., the largest publisher of consumer magazines in the US, reviewed its newsstand distribution principles and procedures for its magazines. This review affected the three major distribution decisions: the evaluation of each magazine’s national print order, the wholesaler allotment procedure, and the store distribution process. For this three-echelon distribution problem, we had to adapt wellknown formal solutions so that they could be implemented within the constraints of the magazine distribution channel. The revised process, referred to as Time Inc.’s Draw Management Program, has generated incremental profits in excess of $3.5 million annually. (Inventory/production: applications. Industries: communications/journalism.)