Social and Behavioral Sciences Commons^™

A Risk-Averse Newsvendor Model With Pricing Consideration, Zuobin Ye

Lingnan Theses and Dissertations (MPhil & PhD)

A decision maker who is facing a random demand for a perishable product, such as newspapers, decides how many units to order for a single selling period. This single-period inventory problem is often referred to as the "classic newsvendor problem", in which the selling price is fixed, the order must be made before the selling period, and the decision maker is risk-neutral. If the decision maker orders too many (overage), the inventory cost will be too high. If the decision maker orders too few (underage), the potential profit will be lost. The optimal order quantity is a balance between the …