Heterogeneity, asymmetry and applicability of behavioral newsvendor models

In this paper we analyze heterogeneity and asymmetry of ordering behavior in high-profit low-profit product settings as well applicability the reference dependent newsvendor model with different psychological costs overordering underordering. Further, introduce a mean preserving by extending overconfident to non-negative confidence parameters. For these models provide simple intuitive conditions on operational behavioral parameters that allow ordering. We relate cost model. Because ordering, descriptive order quantities an individual are not necessarily compatible admissible parameter values under consideration. Therefore, use endogenous approach derive from quantities, if possible. model, enables us constraints guarantee realistic give managerial interpretations analytical findings graphical illustration; two cover whole area plausible quantity combinations for product. discuss how executive inventory manager could advice adapt achieve expected profit target.