On learning process of a newsvendor with censored demand information

Yingshuai Zhao, Xiaobo Zhao () and Zuo-Jun Max Shen
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Yingshuai Zhao: University of Cologne
Xiaobo Zhao: Tsinghua University
Zuo-Jun Max Shen: University of California

Journal of the Operational Research Society, 2016, vol. 67, issue 9, 1200-1211

Abstract: Abstract A behavioural study on the newsvendor problem without demand distribution knowledge or realized demands is conducted. We configure a censored-information scenario, where only sales data in history are provided. With laboratory experiments, we analyse participants ordering levels and ordering oscillations over time. It is observed that participants perform a significant learning process in the censored-information scenario. Moreover, we find that participants make orders by anchoring on the previous-period sales and adjusting to an adapted inventory level. On the basis of the observations, we propose an exponential-type learning (EXP) model to describe the behaviour of decision makers. Comparing with a chasing model that is popularly used in the full-information scenario, the EXP model is more recommended in the censored-information scenario.

Keywords: censored information; anchoring and adjustment heuristic; learning (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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DOI: 10.1057/jors.2016.18

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