Decision-making and the newsvendor problem: an experimental study

U Benzion, Y Cohen, R Peled and Tal Shavit ()
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U Benzion: Ben-Gurion University of the Negev
Y Cohen: The Open University of Israel
R Peled: Ben-Gurion University of the Negev

Journal of the Operational Research Society, 2008, vol. 59, issue 9, 1281-1287

Abstract: Abstract This paper investigates repetitive purchase decisions of perishable items in the face of uncertain demand (the newsvendor problem). The experimental design includes: high, or low profit levels; and uniform, or normal demand distributions. The results show that in all cases both learning and convergence occur and are effected by: (1) the mean demand; (2) the order-size of the maximal expected profit; and (3) the demand level of the immediately preceding round. In all cases of the experimental design, the purchase order converges to a value between the mean demand and the quantity for maximizing the expected profit.

Keywords: inventory; learning; behaviour; management; optimization (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (48)

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Working Paper: Decision-Making and the Newsvendor Problem – An Experimental Study (2007)
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DOI: 10.1057/palgrave.jors.2602470

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