Robust price-setting newsvendor model with interval market size and consumer willingness-to-pay

Charles Wang, Scott Webster and Sidong Zhang

International Journal of Production Economics, 2014, vol. 154, issue C, 100-112

Abstract: We consider a price-setting newsvendor problem with partial information. The newsvendor does not know the price-dependent probability distribution of demand, but is able to estimate lower and upper limits of the market size and consumer willingness-to-pay. The objective is to minimize the maximum loss in expected profit, or minimax regret. We derive closed-form expressions for optimal quantity and price and identify managerial insights.

Keywords: Inventory; Pricing; Newsvendor model; Robust optimization (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:154:y:2014:i:c:p:100-112

DOI: 10.1016/j.ijpe.2014.04.006

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