A single-period inventory system with a general S-shaped utility and exponential demand

Geng, Wei; Zhao, Xuebing; Gao, Deng

doi:10.1007/s11518-010-5128-8

Cited by 11 publications

(4 citation statements)

References 10 publications

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“…Then an algorithm was devised to calculate the optimal policy in the multi-period case. Further, a general S-shaped utility function was used in Geng et al (2010). They assumed that demand is exponentially distributed and obtained the newsvendor’s optimal policy, which is similar to that found in Zhao et al (2009).…”

Section: Introductionmentioning

confidence: 99%

The loss-averse newsvendor problem with random yield

Liu

Song

2013

Transactions of the Institute of Measurement and Control

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This paper studies a single-period inventory problem with random yield and demand, where the loss-averse preferences are adopted to describe the retailer’s (newsvendor’s) decision-making behavior. When the loss-averse retailer orders, the fraction of good units in a batch is stochastic. He will choose an order quantity to maximize his expected utility. Both shortage cost and no shortage cost are considered, respectively. The retailer’s optimal ordering policies are obtained, then the impacts of loss aversion, price and cost on the optimal order quantity are analysed. For the model without shortage cost, the loss-averse retailer’s optimal order quantity is always less than the risk-neutral retailer’s, and decreasing in the loss aversion level. While for the model with shortage cost, the loss-averse retailer’s optimal order quantity may be larger than the risk-neutral retailer’s, and increasing in the loss aversion level. Moreover, it may be decreasing in selling price and increasing in purchasing cost, which will never occur in the case of zero shortage cost. The numerical experiments are conducted to demonstrate our theoretical results.

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Section: Introductionmentioning

confidence: 99%

The loss-averse newsvendor problem with random yield

Liu

Song

2013

Transactions of the Institute of Measurement and Control

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“…They show that a base stock policy is optimal. Geng et al (2010) treat an undiscounted version of the problem in which the decision-maker has an S-shaped utility function for aggregate profit over the horizon. They show that a state-dependent base stock policy is optimal.…”

Section: Literature Reviewmentioning

confidence: 99%

Inventory Management under Periodic Profit Targets

Yan

Yano

Zhang

2019

Production and Operations Management

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M anagers seek to meet quarterly profit targets because missing a target affects both the stock price and bonuses. To capture how these targets can affect a retailer's procurement decisions, we analyze a periodic-review inventory model with a chance constraint in each period that requires meeting a profit target with a given probability, while maximizing expected profit. Corporate profits are reported using accrual accounting, but inventory models typically use cash-basis accounting. We consider both methods. The optimal policy under accrual accounting is quite complicated, involving a state-dependent disposal policy, so we focus on the class of policies in which, in each period, the disposal quantity is increasing in the remaining inventory after demand has occurred, and show that the optimal policy consists of an orderup-to level and a dispose-down-to level in each period. These values may depend upon the constraint in that period and in all subsequent periods, so each constraint may have far-reaching effects. We also derive the optimal policy under cashbasis accounting for the infinite horizon stationary case and find that it is state-and demand dependent, even in this "easy" case. We offer insights into how the chance constraints affect the optimal procurement decisions and profits under both accounting schemes, and show that the chance constraints can lead to perverse behavior under cash-basis accounting.

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“…Shen [3] researched the problem of custom parts purchase with loss aversion. Geng [4] studied a more general value function and used the S-index utility function to characterize the optimal behavior of loss-averse decision-makers. Our results also show that order-losers of decision-makers with loss aversion are lower than order-makers of risk-neutral policy makers.…”

Section: Introductionmentioning

confidence: 99%

Study on the Newsboy Containing Defective Products with Loss Probability Aversion and Loss Aversion

Zhao¹,

Hu²

2018

dtssehs

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Abstract. In this paper, the problem of newsboy containing defective products with loss probability aversion and loss aversion is studied. The foreground value function is established. The concavity of the function is proved. The necessary conditions for the optimal order quantity to meet is revealed. Through compare static analysis we can get: the order quantity increases with increasing emphasis on the outcome of extreme monetization, and vice versa. An example is given to analyze the effect of loss sensitivity on the optimal order quantity. The results show that as the loss sensitivity increases, the optimal order quantity decreases and its foreground value decreases, and vice versa.

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A single-period inventory system with a general S-shaped utility and exponential demand

Abstract: We discuss a single-period inventory system with a general S-shaped utility function and exponential demand. It is shown that there exists a state-dependent order-up-to policy to be optimal. Behaviors of optimal policy are illustrated by a numerical example.

Cited by 11 publications

References 10 publications

The loss-averse newsvendor problem with random yield

The loss-averse newsvendor problem with random yield

Inventory Management under Periodic Profit Targets

Study on the Newsboy Containing Defective Products with Loss Probability Aversion and Loss Aversion

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