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Customer balking behavior in the newsvendor model: Its impact on performance measures and decision under uncertain balking parameters

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  • Lee, Se Won
  • Jung, Uk

Abstract

In this paper, we investigate the performance measures of newsvendor model in an environment of customer balking, which occurs when customers are reluctant to buy a product if its available inventory falls below a threshold level. We derive the explicit expression of several performance measures in the newsvendor model with customer balking and also provide those upper or lower bound in the worst demand distribution. In addition, based on some properties associated with customer balking parameters, we suggest a constrained optimization problem to decide order quantity under the circumstance with uncertain balking parameters given as a form of range. We illustrate the concepts developed here through simple numerical examples and conclude with future research topics under the balking situation.

Suggested Citation

  • Lee, Se Won & Jung, Uk, 2014. "Customer balking behavior in the newsvendor model: Its impact on performance measures and decision under uncertain balking parameters," International Journal of Production Economics, Elsevier, vol. 154(C), pages 274-283.
    • Handle: RePEc:eee:proeco:v:154:y:2014:i:c:p:274-283
    DOI: 10.1016/j.ijpe.2014.05.002
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    References listed on IDEAS

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    1. Liao, Yi & Banerjee, Avijit & Yan, Changyuan, 2011. "A distribution-free newsvendor model with balking and lost sales penalty," International Journal of Production Economics, Elsevier, vol. 133(1), pages 224-227, September.
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    Cited by:

    1. Zhang, Baofeng & Wu, Desheng Dash & Liang, Liang, 2018. "Trade credit model with customer balking and asymmetric market information," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 110(C), pages 31-46.
    2. Yongho Lee & Taesu Cheong, 2022. "Service Level Constrained Distribution-Free Newsvendor Problem with Balking Penalty," Mathematics, MDPI, vol. 10(14), pages 1-14, July.
    3. Raza, Syed Asif & Rathinam, Sivakumar, 2017. "A risk tolerance analysis for a joint price differentiation and inventory decisions problem with demand leakage effect," International Journal of Production Economics, Elsevier, vol. 183(PA), pages 129-145.

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