The loss-averse newsvendor problem with quantity-oriented reference point under CVaR criterion

<p style='text-indent:20px;'>This paper studies a single-period inventory problem with quantity-oriented reference point, where the newsvendor has loss-averse preferences and conditional value-at-risk (CVaR) measure is introduced to hedge against his risk. It shown there exists unique optimal order quantity maximizing CVaR of utility. Moreover, it decreasing in loss aversion level, confidence level target unit profit, respectively. Then we establish sufficient conditions under which newsvendor's may be larger than, equal or less than classical solution. In particular, when profit convex combination maximum minimum, independent price cost parameters. Numerical experiments are conducted illustrate our results present some managerial insights.</p>