We extend behavioral research in newsvendor settings by experimentally exploring the effect of power on newsvendor order decisions under two profit conditions. We also analyze people's risk profiles and explore if the expo-power utility function, which relaxes the assumption of constant absolute risk aversion, explains observed behavior.

In this work, we investigate the value of information when the decision-maker knows whether a perishable product will be in high, moderate or low demand before placing his order. We derive optimality conditions for the probability of the baseline scenario under symmetric distributions and analyze the impact of the cost parameters on simulation experiments. Our results provide managers with deep...

The paper presents a new scenario-based decision rule for the classical version of the newsvendor problem (NP) under complete uncertainty (i.e. uncertainty with unknown probabilities). So far, NP has been analyzed under uncertainty with known probabilities or under uncertainty with partial information (probabilities known incompletely). The novel approach is designed for the sale of new, innova...

This paper investigates repetitive purchase decisions of perishable items in the face of uncertain demand (the newsvendor problem). The experimental design includes: high, or low profit levels; and uniform, or normal demand distributions. The results show that in all cases both learning and convergence occur and are effected by: (1) the mean demand; (2) the order-size of the maximal expected pr...

We study a risk-averse newsvendor problem with quantity competition and price competition. Under the Conditional Value-at-Risk (CVaR) criterion, we characterize the optimal quantity and pricing decisions under both quantity and price competition. For quantity competition, we consider two demand splitting rules, namely proportional demand allocation and demand reallocation. Although competition ...

We perform sensitivity analysis of the classical newsvendor model. Conditions for symmetry/skewness of cost deviation (i.e., deviation of expected cost from its minimum) have been identified and its magnitude is studied by establishing a lower bound. We found the newsvendor model to be sensitive to sub-optimal ordering decisions.

This paper studies the loss allocation problem in a supplier-retailer supply chain when the retailer reveals fairness concern. A loss-sharing contract is provided to coordinate such a loss and some new interesting management insights are found.