How should managers take into account the propagation of supply chain disruptions and risks (i.e. the ripple effect) when they design their inventory policies? For over 60 years, various extensions and applications to the popular newsvendor model have been suggested, where cost/profit are often the focal objective. Accordingly, we propose a new version of the traditional single-period newsvendor model -the "Rippled Newsvendor" -with supply chain severity (i.e. risk propagation) as the primary objective while …
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