Loss-averse newsvendor model with two ordering opportunities and market information updating

Ma, Lijun; Zhao, Yingxue; Xue, Weili; Cheng, T.C.E.; Yan, Hua

doi:10.1016/j.ijpe.2012.07.012

Cited by 72 publications

(47 citation statements)

References 26 publications

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“…Ref. [25] studies a loss-averse newsvendor involving two purchase opportunities with demand forecast update. Because of the existence of long lead time, the retailer makes an initial order at period 1 based on a preliminary demand forecast.…”

Section: Newsvendor Models With Loss Aversionmentioning

confidence: 99%

A Loss-Averse Newsvendor with Cap-and-Trade Carbon Emissions Regulation

Choi

2018

Sustainability

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This study aims to provide an optimization model for operational efficiency in individual firms with cap-and-trade carbon emissions regulation. In addition, this study assumes that customers' demand takes a probability distribution. Under this circumstance, our intention is to draw theoretical and policy implications for carbon emissions regulation by setting and analyzing newsvendor models in which the decision maker is loss-averse for her risk preference. Then, we formulate two loss-averse newsvendor models where we use a "kinked" piecewise linear and concave utility function. More specifically, we show that our objective functions are concave to derive the existence and uniqueness of the optimal solution. After then, through a comparative static analysis, we conduct a sensitivity analysis of how the model parameters affect the optimal solution. Then, the analytical results can be summarized as follows. First, in a lost-sale model, loss aversion significantly affects the optimal policy of newsvendors' decision-making with cap-and-trade regulations. Second, in a stockout penalty cost model, the inclusion of cap-and-trade regulation terms and shortage penalty costs adds more structural complexity in the optimal solution. Thus, the directions of the impacts are mixed and the impacts on the optimal solutions are not monotone, especially with cap-and-trade terms. All these analytical results show big differences between the existing risk-neutral and our loss-averse models, which are confirmed by numerical experiments.

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Section: Newsvendor Models With Loss Aversionmentioning

confidence: 99%

A Loss-Averse Newsvendor with Cap-and-Trade Carbon Emissions Regulation

Choi

2018

Sustainability

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“…He derives the condition under which quick response is beneficial to the supply chain. Ma et al [21] study a risk-averse buyer's purchase problem with two ordering opportunities and information update. Chan et al [22] investigate how information update could be effectively applied in the healthcare industry.…”

Section: Literature Reviewmentioning

confidence: 99%

Forward Sourcing or Spot Trading? Optimal Commodity Procurement Policy with Demand Uncertainty Risk and Forecast Update

Niu

Chu

2017

IEEE Systems Journal

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We consider a commodity procurement problem where a firm satisfies a future customer demand with uncertainty risk via spot trading and forward sourcing. Although the firm can make demand forecast update and hence, remove demand uncertainty when the selling season arrives, it is still susceptible to a high emergency logistics cost at that time spot. Therefore, in this paper, the tradeoff between the mismatching cost of supply and uncertain demand (highest at the beginning of the planning horizon) and the high at-once delivery cost (highest at the ending of the planning horizon) is investigated. We develop a two-stage model and derive the optimal procurement policy for the firm. We also characterize the optimal parameters by assuming demand follows a bivariate normal distribution. Finally, extensive Monte-Carlo simulation is conducted and we quantify the value of forward contracts and the value of information update, using the crude oil data.

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“…References [8][9][10] study inventory management model by assuming that the reference point is a constant. However, Reference [7] mention that rational expectation determines the reference point.…”

Section: Model Descriptionmentioning

confidence: 99%

“…So, we divide into two parts. If , the first part of is (6) If , the second part of is (7) When , the ex post utility can be written as (8) If , it means . And .…”

Section: Whenmentioning

confidence: 99%

The expectation-based loss-averse newsvendor under supply uncertainty

Qin

Xue

2014

2014 11th International Conference on Service Systems and Service Management (ICSSSM)

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We extend the expectation-based loss-averse newsvendor model according [1] by assuming that decision maker confronts deterministic demand and uncertain supply at the beginning of a selling season. We show with numerical study that the higher the penalty coefficient, the lower the optimal order quantity. Higher retail price and salvage value lead to optimally order more. However, when the wholesale price increases, the optimal order quantity decreases.

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Loss-averse newsvendor model with two ordering opportunities and market information updating

Cited by 72 publications

References 26 publications

A Loss-Averse Newsvendor with Cap-and-Trade Carbon Emissions Regulation

A Loss-Averse Newsvendor with Cap-and-Trade Carbon Emissions Regulation

Forward Sourcing or Spot Trading? Optimal Commodity Procurement Policy with Demand Uncertainty Risk and Forecast Update

The expectation-based loss-averse newsvendor under supply uncertainty

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