Narrow Results

This paper investigates the impact of emergency order in a price-dependent newsvendor setting. To this end, we compare two ways handling the excess demand: the excess demand is lost and a penalty cost is incurred, or the excess demand can be satisfied by an emergency order. Which way is better depends on the emergency purchase cost $e$ in emergency-order way and the price $p$ plus penalty cost $g$ in lost-sales way. For a risk-neutral newsvendor, our results indicate that, when $e$ is not larger than $p+g$, the emergency order way can lead to smaller order quantity and higher expected profit. We continue to discuss the impact of newsvendor’s risk aversion and demand uncertainty on the optimal decisions of the two ways. Theoretical analysis and numerical examples indicate that when the emergency purchase cost is not high, the differentials of the optimal order quantities and expected profits will be larger as the degree of risk aversion/demand uncertainty increases. What is more, we prove that there exists a threshold value of the emergency purchase cost so that the two ways handling excess demand can obtain the same expected profit, and this threshold value increases as the degree of risk aversion decreases.

While single-period stochastic inventory problems have been studied in academia and industry, the impacts of both carbon emissions reduction and partial distribution information have not been investigated. In this paper, we consider carbon emission reduction in a single-period inventory problem where both product price and demand are stochastic. When only partial information on the first and second moments of the two stochastic elements is specified, we use the max–min criterion to construct two optimization models under cap-and-trade and carbon tax policies. For each model, we prove the existence of the optimal robust decisions on production quantity and cleaning equipment investment. By comparing the profit and carbon emission between these two models, we identify certain conditions that improve the economic and environmental performance of the manufacturer. Finally, we conduct a numerical study to test the robustness of the optimal operational decisions under each carbon policy.

In this paper, we consider a newsvendor system with strategic customers, who are boundedly rational and risk averse in terms of buying during the selling season or waiting for a clearance sale with price discounts. The newsvendor’s decision is to determine the optimal stock quantity. An optimization problem is formulated with the incorporation of competition among strategic customers with private product value information. We embed risk aversion within the quantal response equilibrium to characterize the strategic customer behavior. The influences of the decision biases of strategic customers on the newsvendor’s decision and profit are discussed. We find that the risk aversion considered alone always benefits the newsvendor. However, the bounded rationality considered alone benefits the newsvendor conditionally. Combining the two behavioral factor influences, the decision biases cause the newsvendor to order more and be better off when the critical fractile is high but to order less and be worse off when the critical fractile is low.