The newsvendor problem: Review and directions for future research

Qin, Yi; Wang, Ruoxuan; Vakharia, Asoo J.; Chen, Yu‐Wen; Şeref, Michelle M. H.

doi:10.1016/j.ejor.2010.11.024

Cited by 407 publications

(182 citation statements)

References 50 publications

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“…Many reviews and extensions to the newsvendor problem have been documented in the literature (Gallego and Moon 1993, Lau and Lau 1996, 1997, Khouja 1999, Petruzzi and Dada 1999, Cachon 2003, Shore 2004, Qin et al 2011. The inferences drawn from this problem aids inventory decision making, capacity planning, yield management, and supply chain contracts in various industries that handle shorter life-cycle products, for example, fashion apparel industries, insurance, hospitality, sporting industries.…”

Section: The Classical Newsvendor Problemmentioning

confidence: 99%

A Review of Behavioral Decision Making in the Newsvendor Problem

Sharma

Nandi

2018

OSCM: An Int. Journal

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Schweitzer and Cachon (2000) demonstrated that choices of decision-maker in the newsvendor problem setting systematically deviate from those that maximize their expected profit. Since then, a large body of empirical and theoretical studies has been published to describe the newsvendor decisionmaking behavior. To establish further, the purpose of this paper is twofold. First, it identifies the various behavioral theories and biases that explain the newsvendor behavior by employing a systematic literature review of peer-reviewed articles published in leading journals from 2000 to 2017. Second, it classifies and analyzes the identified literature from three dimensions of human behavior namely: individual decision making biases, social preferences, and cultural aspects. Our findings from the review show that research has primarily emphasized individual decision making biases while social and cultural aspects lack analysis and are worthy of investigation. Finally, we discuss some directions for future research, followed by the conclusion and limitations of this review.

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Section: The Classical Newsvendor Problemmentioning

confidence: 99%

A Review of Behavioral Decision Making in the Newsvendor Problem

Sharma

Nandi

2018

OSCM: An Int. Journal

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“…The key is the following observation: By a linear change of variables using the density specified by (19), we see that…”

Section: Resampling and An Alternative Testmentioning

confidence: 99%

“…The basic problem is very simple, but it appears to have endless variations. There is now a very large body of literature on such problems; for further reading, refer to the reviews by Cachón (2003) and Qin et al (2011) and the numerous references therein.…”

Section: Literature Reviewmentioning

confidence: 99%

Probabilistic Cost Efficiency and Bounded Rationality in the Newsvendor Model

et al. 2014

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In this paper we establish a link between probabilistic cost efficiency and bounded rationality in the newsvendor model. This establishes a framework where bounded rationality can be examined rigorously by statistical methods. The paper offers a relatively deep theoretical analysis of underorders/overorders in the newsvendor model. The theory is supported by empirical findings from our analysis of empirical data from laboratory experiments. In particular, we observe that underorders are systematically larger than overorders, an issue that our theoretical model explains. From statistical tests we conclude that all variability in our data can be explained by probabilistic cost efficiency and risk aversion.

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“…Subsequently, Chuang developed the decision model by extending the demand distribution into an unidentified demand distribution function [29]. Recently, some literature has also introduced the time-variant variance of demand model into the supply chain to consider the time factors [5][6][7]30]. For example, Wang et al used the time-variant demand model in the supply chain to consider the retailer's purchase time and order quantity under different statement strategies [6].…”

Section: Literature Reviewmentioning

confidence: 99%

An Empirical Research on Marketing Strategies of Different Risk Preference Merchant

Chen

Wang

et al. 2018

Mathematical Problems in Engineering

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Holiday merchandise has unique demand characteristics, unofficial start data, and a limited life cycle. In an intensely competitive market, individual merchants are able to get more sales opportunities if they display their products earlier. In this study, a timevariant variance and time-variant expected market demand model are introduced to investigate the order strategies that are used by risk-averse holiday merchants. Our results show that risk preference, market uncertainty, and market power have a significant effect on the merchant's market strategies. Risk-averse merchants prefer to enhance forecast accuracy rather than using an early-display advantage. They can even give up their early-display advantage if they are faced with increased market uncertainty and small market power. Compared with the fixed purchase cost, the time-sensitive purchase cost can stimulate the merchant to purchase in advance, but this can decrease the merchant's profit. Consequently, risk-averse merchants always display their merchandise later, decrease the order quantity, and, finally, miss the market opportunity.

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The newsvendor problem: Review and directions for future research

Cited by 407 publications

References 50 publications

A Review of Behavioral Decision Making in the Newsvendor Problem

A Review of Behavioral Decision Making in the Newsvendor Problem

Probabilistic Cost Efficiency and Bounded Rationality in the Newsvendor Model

An Empirical Research on Marketing Strategies of Different Risk Preference Merchant

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