Mean-downside-risk and mean-variance newsvendor models : Implications for sustainable fashion retailing

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

146 Scopus Citations
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Author(s)

  • Tsan-Ming Choi
  • Chun-Hung Chiu

Related Research Unit(s)

Detail(s)

Original languageEnglish
Pages (from-to)552-560
Journal / PublicationInternational Journal of Production Economics
Volume135
Issue number2
Publication statusPublished - Feb 2012

Abstract

Newsvendor models have been well-established for studying supply chain management problems with fashionable products. In this paper, we explore the mean-downside-risk (MDR) and mean-variance (MV) newsvendor models under both the exogenous and endogenous retail price decision cases. We first construct analytical models with the MDR and MV objectives. We then show that the analytical solution schemes for both the MDR and MV problems are the same. With the measures for sustainability such as the expected quantity of goods leftover, the expected sales to expected goods leftover ratio, the rate of return on investment, and the probability of achieving a pre-determined profit target, we proceed to compare the levels of sustainability by the fashion retailers which employ the mean-risk and the risk neutral models. Insights are generated. © 2010 Elsevier B.V.

Research Area(s)

  • Fashion supply chain management, Mean-downside risk analysis, Mean-variance analysis, Newsvendor problem