Newsvendor models are widely used in the literature, and usually based upon the assumption of risk neutrality. Recently there is a growing body of literature that attempts to use alternative risk preferences rather than risk neutrality to describe the newsvendor decision-making behavior. In this chapter, we provide an overview of newsvendor models with alternative risk preferences within the ex...

For general law invariant coherent measures of risk, we derive an equivalent representation of a risk-averse newsvendor problem as a mean–risk model. We prove that the higher the weight of the risk functional, the smaller the order quantity. Our theoretical results are confirmed by sample-based optimization.

Traditional stochastic inventory models assume full knowledge of the demand probability distribution. However, in practice, it is often difficult to completely characterize the demand distribution, especially in fast-changing markets. In this paper, we study the newsvendor problem with partial information about the demand distribution (e.g., mean, variance, symmetry, unimodality). In particular...

We consider a single-period inventory model where there are risks associated with the uncertainty in demand as well as supply. Furthermore, the randomness in demand and supply is correlated with the …nancial markets. Recent literature provides ample evidence on this issue. The inventory manager may then exploit this correlation and manage his risks by investing in a portfolio of …nancial instru...

This paper revisits the finite-horizon model of a censored newsvendor by Ding, Puterman and Bisi (2002). An important result claimed there without a proper proof is that the myopic order quantity is always less than or equal to the optimal order quantity. Lu, Song and Zhu (2005b) has supplied a correct proof of the result. We analyze the same model using the interesting concept of the unnormali...

We study a repeated newsvendor game with transshipments. In every period n retailers face a stochastic demand for an identical product and independently place their inventory orders before demand realization. After observing the actual demand, each retailer decides how much of her leftover inventory or unsatisfied demand she wants to share with the other retailers. Residual inventories are then...

We analyze the problem of determining inventory and pricing decisions in a two-period retail setting when an opportunity to refine information about uncertain demand is available. The model extends the newsvendor problem with pricing by allowing for multiple suppliers, the pooling of procurement resources, and more general informational dynamics. One contribution is the solution procedure: we s...