On demand uncertainty in the newsvendor model

R. Andrew Butters

Economics Letters, 2019, vol. 185, issue C

Abstract: I provide three comparative statics involving the level of demand uncertainty for the newsvendor model, two of which lead to robust predictions. I show that for distributions of demand that are greater in the dispersive order, both the expected (censored) sales and share of inventory sold fall. These monotone comparative statics occur despite the lack of one for the (optimal) inventory choice.

Keywords: Demand uncertainty; Newsvendor model; Dispersive order; Inventory; Monotone comparative statics; Censored demand (search for similar items in EconPapers)
JEL-codes: C60 D21 D81 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:185:y:2019:i:c:s016517651930374x

DOI: 10.1016/j.econlet.2019.108746

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