Blockchain-empowered Newsvendor optimization

Chang, Jasmine (Aichih), Michael N. Katehakis, Shi, Jim (Junmin) and Zhipeng Yan

International Journal of Production Economics, 2021, vol. 238, issue C

Abstract: Technology has been widely adopted as a backbone for supply chain management, especially in the context of retailing. For example, Blockchain Technology (BCT) has been embraced as a disruptive technology, though it is still in a nascent stage. This study examines the technology adoption for Newsvendor model (a.k.a Newsboy), as exemplified by a blockchain system. It aims to shed light on how BCT adoption impacts the optimal ordering decisions and the corresponding optimal profit. Importantly, we investigate the optimal adoption of technology for profit optimization while considering the adoption cost. As a result, we visualize how technology adoption shifts the curve. For some selected demand types (e.g., Uniform and Normal distributions) and the Cobb-Douglas cost function, we derive closed-form expressions for the optimal decisions, based on which some useful insights have been developed. Although high adoption of BCT leads to higher demand and lower ordering cost, some counter-intuitive examples have been devised to reveal that the increase in adoption degree might lower the optimal order quantity and it is not always profitable to adopt a higher BCT even if there is no adoption cost. Finally, a sequence of numerical studies complements our analytical results with rich and useful insights.

Keywords: Blockchain; Newsvendor; Tech-savvy consumers; Technology adoption; Stochastic monotonicity (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0925527321001201
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:238:y:2021:i:c:s0925527321001201

DOI: 10.1016/j.ijpe.2021.108144

Access Statistics for this article

International Journal of Production Economics is currently edited by Stefan Minner

More articles in International Journal of Production Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().