An Elasticity Approach to the Newsvendor with Price-Sensitive Demand

An Elasticity Approach to the Newsvendor with Price-Sensitive Demand

We introduce a measure of elasticity of stochastic demand, called the elasticity of the lost-sales rate, which offers a unifying perspective on the well-known newsvendor with pricing problem. This new concept provides a framework to characterize structural results for coordinated and uncoordinated pricing and inventory strategies. Concavity and submodularity of the profit function, as well as s...

TWO-PRICE POLICY FOR A NEWSVENDOR PRODUCT SUPPLY CHAIN WITH TIME AND PRICE SENSITIVE DEMAND by

The Price Elasticity of Marijuana Demand

This paper uses crowd-sourced transaction data from a cross-section of the US to examine demand for marijuana. State and regional variations in consumption, price and quality are explored. Price elasticity of demand estimates range between -0.3 and -0.6. Noticeable price differences are found between high, medium, and low quality marijuana, with high quality marijuana, at $13.57 per gram, 144% ...

On the price of demand censoring in the newsvendor problem

We consider a repeated newsvendor problem where the decision-maker (DM) does not have access to the underlying distribution of discrete demand. We analyze three informational settings: i.) the DM observes realized demand in each period; ii.) the DM only observes realized sales ; and iii.) the DM observes realized sales but also a lost sales indicator that records whether demand was censored or ...

The Censored Newsvendor Problem with Newsvendor Demand Distributions

We study the dynamic newsvendor problem with censored demand for both perishable and storable inventory models. We focus on the cases when demand is represented by a member of the newsvendor family of distributions. We show that the Weibull density is the only member of newsvendor distributions for which the optimal solution can be expressed in scalable form. Consequently, scalability yields su...