Data-driven risk-averse newsvendor problems: developing the CVaR criteria and support vector machines

Chen, Zhenyu

doi:10.1080/00207543.2023.2179350

Cited by 3 publications

(1 citation statement)

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“…Tian et al [27] investigated a data-driven newsboy problem, in which textual review data and historical data were accessible. Chen [28] considered decision-makers' risk preferences in the data-driven newsboy models.…”

Section: Introductionmentioning

confidence: 99%

Integrated Profitability Evaluation for a Newsboy-Type Product in Own Brand Manufacturers

Su,

Tseng,

Lin

2024

Mathematics

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Effective inventory management depends on accurate estimates of product profitability to formulate ordering and manufacturing strategies. The achievable capacity index (ACI) is a simple yet efficient approach to measuring the profitability of newsboy-type products with normally distributed demand, wherein profitability is presented as the probability of achieving the target profit under the optimal ordering quantity. Unfortunately, the ACI is applicable only to retail stores with a single demand. In the current study, we addressed the issue of measuring the integrated profitability of newsboy-type products sold in multiple locations with independent demand levels, such as own-branding-and-manufacture (OBM) companies with multiple owned channels. We began by formulating profitability in accordance with multiple independent normal demands, and then developed an integrated ACI (IACI) to simplify expression. We also derived the statistical properties of the unbiased estimator to determine the true IACI in situations where demand patterns are unknown. Finally, we conducted hypothesis testing to determine whether the integrated profitability meets a stipulated minimum level. For convenience, we tabulated the critical values as a function of sample size, confidence level, the number of channels, and the stipulated minimum level. One can make decisions simply by estimating the IACI based on historical demand data from all channels and then looking up the critical value in the corresponding tables. Consequently, the proposed methods make it possible for OBM managers to address integrated profitability evaluation, which is effective in deciding the optimal timing to pull unprofitable items from the shelves by looking up generic tables. Furthermore, we also performed numerical and sensitivity analyses for a real-world case to illustrate the applicability and some managerial implications of the proposed scheme.

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Section: Introductionmentioning

confidence: 99%

Integrated Profitability Evaluation for a Newsboy-Type Product in Own Brand Manufacturers

Su,

Tseng,

Lin

2024

Mathematics

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A comparative analysis of how to handle stockout scenarios: the impact of newsvendor’s risk attitude

Wood,

Çetinkaya

2024

Ann Oper Res

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The purpose of this paper is to evaluate contrasting approaches for handling excess demand through the lens of a retailer (newsvendor) whose risk attitude (risk-neutral versus risk-averse) is modeled explicitly. We employ representative newsvendor models and provide comparison between two well-established stockout policies when demand exceeds supply. The “while supplies last” policy avoids the need for a secondary production order to satisfy the excess demand but faces potential opportunity cost through lost sales. Conversely, the “accepting backorders” policy relies on recourse production availability which is potentially costly but meets all levels of realized demand. Across distinct parameter classes, we incorporate comparison between the two policies in terms of financial metrics including expected profit and conditional value-at-risk criteria as well as metrics that relate to inventory availability and, hence, customer service, e.g., stockout probabilities and expected excess inventory. Powerful analytical results encompass both financial and inventory metrics and reveal that the outperforming policy is simply determined through relative underage cost values. That is, our insights indicate general advantages of accepting backorders when profit margins are sufficiently large and advantages of ignoring excess demand when profit margins are smaller. Although these extensive analytical takeaways hold in general, our numerical study reveals mean order quantity deviations (decision bias) in addition to which modeling approaches and counterpart optimal solutions maintain outperformance (resiliency) or lead to underperformance (sensitivity) when evaluated across all objective function criteria.

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A data-driven newsvendor model with unknown demand and supply distribution

Kou,

Cheng,

Guo

et al. 2024

JIMO

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Data-driven risk-averse newsvendor problems: developing the CVaR criteria and support vector machines

Cited by 3 publications

References 50 publications

Integrated Profitability Evaluation for a Newsboy-Type Product in Own Brand Manufacturers

Integrated Profitability Evaluation for a Newsboy-Type Product in Own Brand Manufacturers

A comparative analysis of how to handle stockout scenarios: the impact of newsvendor’s risk attitude

A data-driven newsvendor model with unknown demand and supply distribution

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