Loss-averse newsvendor model with two ordering opportunities and market information updating

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

69 Scopus Citations
View graph of relations

Author(s)

  • Lijun Ma
  • Yingxue Zhao
  • Weili Xue
  • T. C E Cheng
  • Houmin Yan

Related Research Unit(s)

Detail(s)

Original languageEnglish
Pages (from-to)912-921
Journal / PublicationInternational Journal of Production Economics
Volume140
Issue number2
Publication statusPublished - Dec 2012

Abstract

A fashion supply chain characterized by a long lead time and a short selling season is considered in this paper. Facing demand uncertainty, the risk averse retailer has two opportunities to make order decisions before the demand is realized. The risk aversion is modelled as a penalty to the decision maker (the retailer) if a target profit is not attained. We derive the retailers optimal ordering decisions and analyze the monotonicity behaviours of the critical market signal, the optimal first-stage order quantity, and the optimal expected payoff with respect to the penalty coefficient. We also examine the impact of demand forecast quality on the retailers decisions and extend the study to the case where order cancellation is allowed. © 2012 Elsevier B.V. All rights reserved.

Research Area(s)

  • Information update, Loss averse, Quick response, Supply chain management

Citation Format(s)

Loss-averse newsvendor model with two ordering opportunities and market information updating. / Ma, Lijun; Zhao, Yingxue; Xue, Weili et al.

In: International Journal of Production Economics, Vol. 140, No. 2, 12.2012, p. 912-921.

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review