Stocking and pricing decisions under endogenous demand and reference point effects

Mandal, Prasenjit; Kaul, Rupali; Jain, Tarun

doi:10.1016/j.ejor.2017.05.053

Cited by 37 publications

(32 citation statements)

References 58 publications

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“…At the end of the selling season, the retailer may suffer from either overstock or stockout due to the demand uncertainty. Following Long and Nasiry (2015), Mandal et al (2018), and Vipin and Amit (2019), the cost of stockout and the salvage value of unsold product are assumed to be zeros.…”

Section: The Newsvendor Model With Loss Aversion and Reference Point mentioning

confidence: 99%

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Joint pricing and stocking decisions for a newsvendor problem with loss aversion and reference point effect

Qiu

Sun

2020

Manage Decis Econ

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This study investigates the joint pricing and stocking decisions for a loss‐averse retailer with reference point effect under stochastic demand. By solving an expected utility maximization model developed based on the prospect theory, the optimal pricing and stocking decisions are derived and compared with those of the classical newsvendor. The results show that the optimal decisions significantly depend on the loss aversion coefficient, optimism level, and reference effect strength. Smaller loss aversion coefficient and lower optimism level lead to higher expected utilities. In particular, a loss‐averse retailer with a smaller loss aversion coefficient benefits from a higher reference effect strength and vice versa.

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Section: The Newsvendor Model With Loss Aversion and Reference Point mentioning

confidence: 99%

“…In particular, losses are perceived to be more important than gains. This result implies that human decisions depend not only on loss aversion but also on reference point effects (Mandal, Kaul, & Jain, 2018; Vipin & Amit, 2019).…”

Section: Introductionmentioning

confidence: 98%

Joint pricing and stocking decisions for a newsvendor problem with loss aversion and reference point effect

Qiu

Sun

2020

Manage Decis Econ

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“…Jammernegg and Kischka [41] developed a procedure to calculate the optimal values of the order quantity, expected profit, and selling price in the newsvendor framework. Mandal et al [42] elaborates on the consumers switch to the alternative option as soon as they realize the lower price; likewise, firms make their pricing and stocking decisions. Hu and Su [27] eliminated the assumption on salvage and considered a clearance price as a decision variable.…”

Section: Literature Reviewmentioning

confidence: 99%

Dynamic Pricing in a Multi-Period Newsvendor Under Stochastic Price-Dependent Demand

2019

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The faster growth of technology stipulates the rapid development of new products; with the spread of new technologies old ones are outdated and their market demand declines sharply. The combined impact of demand uncertainty and short life-cycles complicate ordering and pricing decision of retailers that leads to a decrease in the profit. This study deals with the joint inventory and dynamic pricing policy for such products considering stochastic price-dependent demand. The aim is to develop a discount policy that enables the retailer to order more at the start of the selling season thus increase the profit and market share of the retailer. A multi-period newsvendor model is developed under the distribution-free approach and the optimal stocking quantities, unit selling price, and the discount percentage are obtained. The results show that the proposed discount policy increases the expected profit of the system. Additionally, the stocking quantity and the unit selling price also increases in the proposed discount policy. The robustness of the proposed model is illustrated with numerical examples and sensitivity analysis. Managerial insights are given to extract significant insights for the newsvendor model with discount policy.

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“…Mandal et.al studied the firms order and price decision about the operations management problems with reference points effect. The result showed that the loss aversion has impact on firm's ordering and pricing decisions [2]. Jiang and Ren proposed dynamic reference points on the basis of different flight delay scenarios and passengers' attributes.…”

Section: Introductionmentioning

confidence: 99%

Quality Assurance Method for the Supply Chain of the Complex Product Under Reference Point Effects

Li¹,

Liu²

2019

Proceedings of the Fourth International Conference on Economic and Business Management (FEBM 2019)

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In the process of the supply chain's quality cooperation, a main manufacturer's psychological utility is not only affected by the delivery's quality level but also the quality reference point, which is the industry average level. The participants' economic value has been calculated by adjusting the risk avoidance coefficient, the production cost function and the quality improvement profit in the contract. Meanwhile, the objective programming model is constructed to calculate the maximum quality equilibrium solution of both parties. In this way, supplier's behavior is effectively controlled to realize the reciprocal transaction of supply chain quality cooperation.

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Stocking and pricing decisions under endogenous demand and reference point effects

Cited by 37 publications

References 58 publications

Joint pricing and stocking decisions for a newsvendor problem with loss aversion and reference point effect

Joint pricing and stocking decisions for a newsvendor problem with loss aversion and reference point effect

Dynamic Pricing in a Multi-Period Newsvendor Under Stochastic Price-Dependent Demand

Quality Assurance Method for the Supply Chain of the Complex Product Under Reference Point Effects

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