Risk tolerance and a retailer's pricing and ordering policies within a newsvendor framework
AbstractThis paper evaluates the pricing and ordering policies of a retailer, facing a price-dependent stochastic demand, within a newsvendor framework, under different degrees of risk tolerance and under a variety of optimizing objectives. These are (i) maximizing expected profit, for a retailer who may be risk-seeker, risk-averse or risk neutral; (ii) deriving a maximin strategy of maximizing a minimum guaranteed profit and (iii) modeling the probability of exceeding a target profit, as a constraint or as an objective. Some analytical properties and numerical examples illustrate the main features of the models and provide some comparative policy analysis across the model.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Omega.
Volume (Year): 40 (2012)
Issue (Month): 2 (April)
Contact details of provider:
Web page: http://www.elsevier.com/wps/find/journaldescription.cws_home/375/description#description
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Khouja, Moutaz, 1999. "The single-period (news-vendor) problem: literature review and suggestions for future research," Omega, Elsevier, vol. 27(5), pages 537-553, October.
- Xu, Minghui & Chen, Youhua (Frank) & Xu, Xiaolin, 2010. "The effect of demand uncertainty in a price-setting newsvendor model," European Journal of Operational Research, Elsevier, vol. 207(2), pages 946-957, December.
- Keren, Baruch & Pliskin, Joseph S., 2006. "A benchmark solution for the risk-averse newsvendor problem," European Journal of Operational Research, Elsevier, vol. 174(3), pages 1643-1650, November.
- Wang, Charles X. & Webster, Scott, 2009. "The loss-averse newsvendor problem," Omega, Elsevier, vol. 37(1), pages 93-105, February.
- Wang, Charles X. & Webster, Scott & Suresh, Nallan C., 2009. "Would a risk-averse newsvendor order less at a higher selling price?," European Journal of Operational Research, Elsevier, vol. 196(2), pages 544-553, July.
- Lin, Chen-Sin & Kroll, Dennis E., 1997. "The single-item newsboy problem with dual performance measures and quantity discounts," European Journal of Operational Research, Elsevier, vol. 100(3), pages 562-565, August.
- Vipul Agrawal & Sridhar Seshadri, 2000. "Impact of Uncertainty and Risk Aversion on Price and Order Quantity in the Newsvendor Problem," Manufacturing & Service Operations Management, INFORMS, vol. 2(4), pages 410-423, July.
- Yang, Shilei & Shi, Chunming Victor & Zhao, Xuan, 2011. "Optimal ordering and pricing decisions for a target oriented newsvendor," Omega, Elsevier, vol. 39(1), pages 110-115, January.
- Gotoh, Jun-ya & Takano, Yuichi, 2007. "Newsvendor solutions via conditional value-at-risk minimization," European Journal of Operational Research, Elsevier, vol. 179(1), pages 80-96, May.
- Louis Eeckhoudt & Christian Gollier & Harris Schlesinger, 1995. "The Risk-Averse (and Prudent) Newsboy," Management Science, INFORMS, vol. 41(5), pages 786-794, May.
- Feng, Tianjun & Keller, L. Robin & Zheng, Xiaona, 2011. "Decision making in the newsvendor problem: A cross-national laboratory study," Omega, Elsevier, vol. 39(1), pages 41-50, January.
- Yakov Amihud & Baruch Lev, 1981. "Risk Reduction as a Managerial Motive for Conglomerate Mergers," Bell Journal of Economics, The RAND Corporation, vol. 12(2), pages 605-617, Autumn.
- Ahmed, Shabbir & Cakmak, Ulas & Shapiro, Alexander, 2007. "Coherent risk measures in inventory problems," European Journal of Operational Research, Elsevier, vol. 182(1), pages 226-238, October.
- Barry Alan Pasternack, 1985. "Optimal Pricing and Return Policies for Perishable Commodities," Marketing Science, INFORMS, vol. 4(2), pages 166-176.
- Maurice E. Schweitzer & Gérard P. Cachon, 2000. "Decision Bias in the Newsvendor Problem with a Known Demand Distribution: Experimental Evidence," Management Science, INFORMS, vol. 46(3), pages 404-420, March.
- F. J. Arcelus & G. Srinivasan, 1987. "Inventory Policies Under Various Optimizing Criteria and Variable Markup Rates," Management Science, INFORMS, vol. 33(6), pages 756-762, June.
- Lau, Hon-Shiang & Lau, Amy Hing-Ling, 1999. "Manufacturer's pricing strategy and return policy for a single-period commodity," European Journal of Operational Research, Elsevier, vol. 116(2), pages 291-304, July.
- Balachandran, Kashi R. & Wang, Hsiao-Wen & Li, Shu-Hsing & Wang, Taychang, 2013. "In-house capability and supply chain decisions," Omega, Elsevier, vol. 41(2), pages 473-484.
- Pando, Valentín & San-José, Luis A. & García-Laguna, Juan & Sicilia, Joaquín, 2013. "A newsboy problem with an emergency order under a general backorder rate function," Omega, Elsevier, vol. 41(6), pages 1020-1028.
- Shah, Nita H & Soni, Hardik N & Patel, Kamlesh A, 2013. "Optimizing inventory and marketing policy for non-instantaneous deteriorating items with generalized type deterioration and holding cost rates," Omega, Elsevier, vol. 41(2), pages 421-430.
- Jammernegg, Werner & Kischka, Peter, 2013. "The price-setting newsvendor with service and loss constraints," Omega, Elsevier, vol. 41(2), pages 326-335.
- Khouja, Moutaz & Park, Sungjune & Zhou, Jing, 2013. "A free gift card alternative to price discounts in the newsvendor problem," Omega, Elsevier, vol. 41(4), pages 665-678.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.