In this paper, we address the question of how the assessment of costs influences decisions in a newsvendor setting. We expect that different cost types lead to different behavior. In our investigation, we consider a newsvendor problem with opportunity costs and a newsvendor problem with penalty costs. In addition, we differentiate between three cases with different margins for each of the two p...

In this paper, we propose a stochastic programming model for the well-known single-period newsvendor problem by adopting the conditional Value-at-Risk (CVaR) as the risk metric in the objective function. The demand uncertainty is modeled in terms of discrete scenarios that reflect the empirical distributions implied by market demand data. Our numerical results demonstrate that the higher order ...

Many experimental studies have demonstrated that human decision-makers exhibit the pull-to-center effect in newsvendor decision. It has been shown in the literature that prospect theory with a decision-dependent reference point can predict the pull-to-center effect for the newsvendor problem by assuming a uniform distribution of demand. In this paper, we prove this result for a general case: pr...

In this paper, we review the contributions to date for analyzing the newsvendor problem. Our focus is on examining the specific extensions for analyzing this problem in the context of modeling customer demand, supplier costs, the buyer risk profile, and the selective newsvendor setting. Over and above summarizing the current literature, we also provide directions for future research in each area.

This paper investigates the e ect of demand censoring on the optimal policy in newsvendor inventory models with general parametric demand distributions and unknown parameter values. We show that the newsvendor problem with observable lost sales reduces to a sequence of single-period problems while the newsvendor problem with unobservable lost sales requires a dynamic analysis. Using a Bayesian ...

We study the dynamic newsvendor problem with censored demand for both perishable and storable inventory models. We focus on the cases when demand is represented by a member of the newsvendor family of distributions. We show that the Weibull density is the only member of newsvendor distributions for which the optimal solution can be expressed in scalable form. Consequently, scalability yields su...