Risk tolerance and a retailer's pricing and ordering policies within a newsvendor framework

Risk tolerance and a retailer's pricing and ordering policies within a newsvendor framework

0.00 Avg rating0 Votes
Article ID: iaor20117406
Volume: 40
Issue: 2
Start Page Number: 188
End Page Number: 198
Publication Date: Apr 2012
Journal: Omega
Authors: , ,
Keywords: inventory: order policies, combinatorial optimization, risk
Abstract:

This paper evaluates the pricing and ordering policies of a retailer, facing a price‐dependent stochastic demand, within a newsvendor framework, under different degrees of risk tolerance and under a variety of optimizing objectives. These are (i) maximizing expected profit, for a retailer who may be risk‐seeker, risk‐averse or risk neutral; (ii) deriving a maximin strategy of maximizing a minimum guaranteed profit and (iii) modeling the probability of exceeding a target profit, as a constraint or as an objective. Some analytical properties and numerical examples illustrate the main features of the models and provide some comparative policy analysis across the model.

Reviews

Required fields are marked *. Your email address will not be published.