Learning by Doing in the Newsvendor Problem: A Laboratory Investigation of the Role of Experience and Feedback

Learning by Doing in the Newsvendor Problem: A Laboratory Investigation of the Role of Experience and Feedback

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Article ID: iaor200964592
Country: United States
Volume: 10
Issue: 3
Start Page Number: 519
End Page Number: 538
Publication Date: Jun 2008
Journal: Manufacturing & Service Operations Management
Authors: ,
Keywords: learning, inventory: order policies
Abstract:

We investigate learning by doing in the newsvendor inventory problem. An earlier study observed that decision makers tend to anchor their orders around average demand and fail to adjust sufficiently toward the expected profit–maximizing order. Principles of behavioral theory suggest some relatively simple interventions into the decision maker's experience and feedback that might improve performance, and these guide our investigation. The results imply that the institutional organization of experience and feedback may have a significant influence on whether inventory is stocked optimally.

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