Newsvendor decisions under supply uncertainty

We analyse the impact of supply uncertainty on newsvendor decisions. First, we derive a solution for a newsvendor facing stochastic supply yield, in addition to stochastic demand. While earlier research has considered independent uncertainties, we derive the optimal order quantity for interdependent...

Full description

Saved in:

Bibliographic Details
Published in:	International journal of production research Vol. 53; no. 5; pp. 1544 - 1560
Main Authors:	Käki, Anssi, Liesiö, Juuso, Salo, Ahti, Talluri, Srinivas
Format:	Journal Article
Language:	English
Published:	London Taylor & Francis 04-03-2015 Taylor & Francis LLC
Subjects:	Asymmetry Decision analysis Decision making Decisions Deviation Economic theory Human subjects Impact analysis Mathematical analysis newsvendor experiment newsvendor model Optimization Order quantity procurement stochastic demand and supply Stochastic models Stochasticity Studies Supply & demand Supply and demand Uncertainty yield uncertainty
Online Access:	Get full text
Tags:	Add Tag No Tags, Be the first to tag this record!

Abstract	We analyse the impact of supply uncertainty on newsvendor decisions. First, we derive a solution for a newsvendor facing stochastic supply yield, in addition to stochastic demand. While earlier research has considered independent uncertainties, we derive the optimal order quantity for interdependent demand and supply and provide a closed-form solution for a specific copula-based dependence structure. This allows us to give insights into how dependence impacts the newsvendor's decision, profit and risk level. In addition to the theory, we present experimental results that show how difficult newsvendor decisions under supply uncertainty are for human subjects. In our experiment, the control group replicated a well-known newsvendor experiment, whereas the test group faced additional supply yield uncertainty. Comparison of these results shows that under low-profit condition, subjects are able to incorporate supply uncertainty quite well in their decisions. Under high-profit condition, the deviation from the optimum is much more significant. We discuss this asymmetry and also propose some ways to improve newsvendor decision-making.
AbstractList	We analyse the impact of supply uncertainty on newsvendor decisions. First, we derive a solution for a newsvendor facing stochastic supply yield, in addition to stochastic demand. While earlier research has considered independent uncertainties, we derive the optimal order quantity for interdependent demand and supply and provide a closed-form solution for a specific copula-based dependence structure. This allows us to give insights into how dependence impacts the newsvendor's decision, profit and risk level. In addition to the theory, we present experimental results that show how difficult newsvendor decisions under supply uncertainty are for human subjects. In our experiment, the control group replicated a well-known newsvendor experiment, whereas the test group faced additional supply yield uncertainty. Comparison of these results shows that under low-profit condition, subjects are able to incorporate supply uncertainty quite well in their decisions. Under high-profit condition, the deviation from the optimum is much more significant. We discuss this asymmetry and also propose some ways to improve newsvendor decision-making.
Author	Käki, Anssi Salo, Ahti Talluri, Srinivas Liesiö, Juuso
Author_xml	– sequence: 1 givenname: Anssi surname: Käki fullname: Käki, Anssi email: anssi.kaki@aalto.fi organization: Systems Analysis Laboratory, School of Science, Aalto University – sequence: 2 givenname: Juuso surname: Liesiö fullname: Liesiö, Juuso organization: Systems Analysis Laboratory, School of Science, Aalto University – sequence: 3 givenname: Ahti surname: Salo fullname: Salo, Ahti organization: Systems Analysis Laboratory, School of Science, Aalto University – sequence: 4 givenname: Srinivas surname: Talluri fullname: Talluri, Srinivas organization: Department of Supply Chain Management, Eli Broad Graduate School of Management, Michigan State University
BookMark	eNp9kE1LxDAQhoMouLv6DzwsePHSNWk-mpxEFr9g0YuCt5A2E-jSTdakdem_t7V68eBchoHnfRmeOTr2wQNCFwSvCJb4GuMcF5zRVY4JWymeF0oeoRmhQmRcyvdjNBuRbGRO0TylLR6GSzZD2TMc0id4G-LSQlWnOvi07LyFuEzdft_0w1FBbE3t2_4MnTjTJDj_2Qv0dn_3un7MNi8PT-vbTVZRpdqssMpyKhyhFpilKs-FqAx1hcJKMSzBlRVIXErFgHFWCu64dSUphSGFIZIu0NXUu4_ho4PU6l2dKmga4yF0SRMhlCxkLvCAXv5Bt6GLfvhuoDgWnOHvQjZRVQwpRXB6H-udib0mWI8O9a9DPTrUk8MhdjPFau9C3JlDiI3VrembEF00fvCl6b8NXwB9eMA
CitedBy_id	crossref_primary_10_1108_BIJ_01_2021_0061 crossref_primary_10_1007_s00500_018_03676_8 crossref_primary_10_2139_ssrn_4770465 crossref_primary_10_3390_systems11070333 crossref_primary_10_1108_IJOPM_05_2019_0339 crossref_primary_10_1080_24725854_2020_1770902 crossref_primary_10_1016_j_tre_2022_102986 crossref_primary_10_1080_00207543_2018_1431413 crossref_primary_10_2139_ssrn_4529461 crossref_primary_10_1080_01605682_2017_1409411 crossref_primary_10_1016_j_dss_2020_113251 crossref_primary_10_2139_ssrn_2721356 crossref_primary_10_1111_poms_13515 crossref_primary_10_1080_00207543_2016_1184348 crossref_primary_10_3934_jimo_2024080 crossref_primary_10_1007_s00291_022_00701_z crossref_primary_10_1007_s12247_019_09396_2 crossref_primary_10_1287_msom_2017_0701 crossref_primary_10_1016_j_omega_2020_102207 crossref_primary_10_1080_00207543_2019_1588480 crossref_primary_10_3390_en12234598 crossref_primary_10_1111_deci_12564 crossref_primary_10_2139_ssrn_2485149 crossref_primary_10_3389_fpsyg_2021_754626 crossref_primary_10_1016_j_ejor_2019_04_021 crossref_primary_10_1080_00207543_2018_1494393 crossref_primary_10_1111_poms_12899 crossref_primary_10_1016_j_ijpe_2022_108509 crossref_primary_10_1080_00207543_2018_1443522 crossref_primary_10_1016_j_cie_2019_03_042
Cites_doi	10.1080/00207543.2013.835497 10.1287/opre.38.4.634 10.1287/opre.47.2.183 10.1007/s00184-008-0174-7 10.1287/mnsc.46.3.404.12070 10.1287/mnsc.1060.0515 10.1080/01621459.1960.10483368 10.1287/msom.1080.0228 10.1016/j.cor.2006.01.015 10.1111/j.1937-5956.2009.01022.x 10.1561/0200000022 10.1023/B:ANOR.0000012275.01260.f5 10.1016/j.omega.2006.08.003 10.1016/S0305-0483(99)00017-1 10.1057/palgrave.jors.2602470 10.1287/msom.1100.0294 10.21314/JOR.2000.038 10.1287/mnsc.1040.0215 10.1287/msom.1060.0128 10.1016/j.obhdp.2008.05.005 10.1016/j.jom.2012.11.001 10.1287/opre.1080.0603 10.1287/mnsc.1120.1550 10.1111/j.1937-5956.2009.01110.x 10.1016/j.ejor.2006.03.022 10.1287/opre.43.2.311 10.1016/j.ejor.2010.11.024 10.1111/j.1937-5956.2012.01354.x 10.1016/j.omega.2008.07.006 10.2307/1914185 10.1287/msom.1060.0190 10.1287/msom.1070.0200 10.1016/j.ejor.2005.03.047
ContentType	Journal Article
Copyright	2014 Taylor & Francis 2014 Copyright Taylor & Francis Group 2015
Copyright_xml	– notice: 2014 Taylor & Francis 2014 – notice: Copyright Taylor & Francis Group 2015
DBID	AAYXX CITATION 7SC 8FD F28 FR3 JQ2 L7M L~C L~D
DOI	10.1080/00207543.2014.952798
DatabaseName	CrossRef Computer and Information Systems Abstracts Technology Research Database ANTE: Abstracts in New Technology & Engineering Engineering Research Database ProQuest Computer Science Collection Advanced Technologies Database with Aerospace Computer and Information Systems Abstracts Academic Computer and Information Systems Abstracts Professional
DatabaseTitle	CrossRef Technology Research Database Computer and Information Systems Abstracts – Academic ProQuest Computer Science Collection Computer and Information Systems Abstracts Engineering Research Database Advanced Technologies Database with Aerospace ANTE: Abstracts in New Technology & Engineering Computer and Information Systems Abstracts Professional
DatabaseTitleList	Technology Research Database Technology Research Database
DeliveryMethod	fulltext_linktorsrc
Discipline	Engineering
EISSN	1366-588X
EndPage	1560
ExternalDocumentID	3577720591 10_1080_00207543_2014_952798 952798
Genre	Articles Feature
GroupedDBID	-~X .7F .QJ 0BK 0R~ 29J 2DF 30N 3YN 4.4 5GY 5VS 8VB A8Z AAAVI AAENE AAJMT AALDU AAMIU AAPUL AAQRR ABBKH ABCCY ABFIM ABHAV ABJVF ABLIJ ABPEM ABQHQ ABTAI ABXUL ACGEJ ACGFO ACGFS ACGOD ACIWK ACNCT ACTIO ADCVX ADGTB ADXPE AEGXH AEGYZ AEISY AEMOZ AENEX AEOZL AEPSL AEYOC AFKVX AFOLD AFWLO AGDLA AGMYJ AHDLD AIAGR AIJEM AIRXU AJWEG AKBVH AKOOK AKVCP ALMA_UNASSIGNED_HOLDINGS ALQZU AQRUH AVBZW AWYRJ BLEHA CCCUG CE4 CS3 DGEBU DKSSO DU5 EBD EBE EBO EBR EBS EBU EJD EMK EPL E~A E~B FUNRP FVPDL GTTXZ H13 HF~ HZ~ H~9 H~P I-F IPNFZ J.P KYCEM M4Z ML~ NA5 NX~ O9- P2P PQEST PQQKQ QWB RIG RNANH ROSJB RTWRZ S-T SNACF TEN TFL TFT TFW TH9 TN5 TNC TTHFI TWF UT5 UU3 V1K ZGOLN ZL0 ~S~ AAYXX ABJNI ABPAQ ABXYU AHDZW CITATION ESTFP K1G TBQAZ TDBHL TUROJ 7SC 8FD F28 FR3 JQ2 L7M L~C L~D
ID	FETCH-LOGICAL-c399t-7d9d536f13de4d392266ca3f79099408efbce80b894e454b65f5dfb1b6a17a183
IEDL.DBID	TFW
ISSN	0020-7543
IngestDate	Sat Oct 26 01:49:06 EDT 2024 Thu Oct 10 16:25:54 EDT 2024 Thu Nov 21 21:08:32 EST 2024 Tue Jun 13 19:30:30 EDT 2023
IsPeerReviewed	true
IsScholarly	true
Issue	5
Language	English
LinkModel	DirectLink
MergedId	FETCHMERGED-LOGICAL-c399t-7d9d536f13de4d392266ca3f79099408efbce80b894e454b65f5dfb1b6a17a183
Notes	ObjectType-Article-1 SourceType-Scholarly Journals-1 ObjectType-Feature-2 content type line 23
PQID	1650654018
PQPubID	30924
PageCount	17
ParticipantIDs	proquest_miscellaneous_1669878260 proquest_journals_1650654018 informaworld_taylorfrancis_310_1080_00207543_2014_952798 crossref_primary_10_1080_00207543_2014_952798
PublicationCentury	2000
PublicationDate	2015-03-04
PublicationDateYYYYMMDD	2015-03-04
PublicationDate_xml	– month: 03 year: 2015 text: 2015-03-04 day: 04
PublicationDecade	2010
PublicationPlace	London
PublicationPlace_xml	– name: London
PublicationTitle	International journal of production research
PublicationYear	2015
Publisher	Taylor & Francis Taylor & Francis LLC
Publisher_xml	– name: Taylor & Francis – name: Taylor & Francis LLC
References	Porteus E. L. (CIT0029) 1990; 2 CIT0030 CIT0010 CIT0032 CIT0012 CIT0034 CIT0011 CIT0033 Inderfurth K. (CIT0018) 2004; 12 Balakrishnan N. (CIT0003) 2009 CIT0014 CIT0036 CIT0013 CIT0035 CIT0016 CIT0015 CIT0037 CIT0017 CIT0019 CIT0021 CIT0020 CIT0001 CIT0023 CIT0022 CIT0002 CIT0024 CIT0005 CIT0027 CIT0004 CIT0026 CIT0007 CIT0006 CIT0028 CIT0009 CIT0008 Rockafellar R. T. (CIT0031) 2000; 2
References_xml	– ident: CIT0027 doi: 10.1080/00207543.2013.835497 – volume-title: “Continuous Bivariate Distributions.” Chap. 2 in Distributions Expressed as Copulas year: 2009 ident: CIT0003 contributor: fullname: Balakrishnan N. – ident: CIT0017 doi: 10.1287/opre.38.4.634 – ident: CIT0028 doi: 10.1287/opre.47.2.183 – ident: CIT0001 doi: 10.1007/s00184-008-0174-7 – ident: CIT0032 doi: 10.1287/mnsc.46.3.404.12070 – ident: CIT0034 doi: 10.1287/mnsc.1060.0515 – ident: CIT0016 doi: 10.1080/01621459.1960.10483368 – ident: CIT0007 doi: 10.1287/msom.1080.0228 – ident: CIT0036 doi: 10.1016/j.cor.2006.01.015 – ident: CIT0008 doi: 10.1111/j.1937-5956.2009.01022.x – ident: CIT0020 doi: 10.1561/0200000022 – ident: CIT0014 doi: 10.1023/B:ANOR.0000012275.01260.f5 – ident: CIT0035 doi: 10.1016/j.omega.2006.08.003 – ident: CIT0023 doi: 10.1016/S0305-0483(99)00017-1 – ident: CIT0004 doi: 10.1057/palgrave.jors.2602470 – ident: CIT0024 doi: 10.1287/msom.1100.0294 – volume: 2 start-page: 21 issue: 3 year: 2000 ident: CIT0031 publication-title: Journal of Risk doi: 10.21314/JOR.2000.038 contributor: fullname: Rockafellar R. T. – ident: CIT0009 doi: 10.1287/mnsc.1040.0215 – volume: 12 start-page: 117 issue: 2 year: 2004 ident: CIT0018 publication-title: Central European Journal of Operations Research contributor: fullname: Inderfurth K. – ident: CIT0011 doi: 10.1287/msom.1060.0128 – ident: CIT0026 doi: 10.1016/j.obhdp.2008.05.005 – ident: CIT0012 doi: 10.1016/j.jom.2012.11.001 – ident: CIT0010 doi: 10.1287/opre.1080.0603 – ident: CIT0006 doi: 10.1287/mnsc.1120.1550 – ident: CIT0013 doi: 10.1111/j.1937-5956.2009.01110.x – ident: CIT0015 doi: 10.1016/j.ejor.2006.03.022 – ident: CIT0037 doi: 10.1287/opre.43.2.311 – ident: CIT0030 doi: 10.1016/j.ejor.2010.11.024 – ident: CIT0002 doi: 10.1111/j.1937-5956.2012.01354.x – ident: CIT0021 doi: 10.1016/j.omega.2008.07.006 – ident: CIT0019 doi: 10.2307/1914185 – ident: CIT0005 doi: 10.1287/msom.1060.0190 – volume: 2 start-page: 605 volume-title: Handbooks in OR & MS year: 1990 ident: CIT0029 contributor: fullname: Porteus E. L. – ident: CIT0033 doi: 10.1287/msom.1070.0200 – ident: CIT0022 doi: 10.1016/j.ejor.2005.03.047
SSID	ssj0000584
Score	2.30408
Snippet	We analyse the impact of supply uncertainty on newsvendor decisions. First, we derive a solution for a newsvendor facing stochastic supply yield, in addition...
SourceID	proquest crossref informaworld
SourceType	Aggregation Database Publisher
StartPage	1544
SubjectTerms	Asymmetry Decision analysis Decision making Decisions Deviation Economic theory Human subjects Impact analysis Mathematical analysis newsvendor experiment newsvendor model Optimization Order quantity procurement stochastic demand and supply Stochastic models Stochasticity Studies Supply & demand Supply and demand Uncertainty yield uncertainty
Title	Newsvendor decisions under supply uncertainty
URI	https://www.tandfonline.com/doi/abs/10.1080/00207543.2014.952798 https://www.proquest.com/docview/1650654018 https://search.proquest.com/docview/1669878260
Volume	53
hasFullText	1
inHoldings	1
isFullTextHit
isPrint
link	http://sdu.summon.serialssolutions.com/2.0.0/link/0/eLvHCXMwpV07T8MwELagEwy8EYWCgsRqFDfnxB4RtGJioQg2y88xRU069N9zzqNQIRhgtBwn0eUeX-y77wi5AZtaAdmYWpF5CoI7KjEsUjAyeBB6bE2zdfFcPL2Jh0mkyVlX8ce0yvgPHVqiiMZXR-PWpuoz4mIFNwY6yGJiFtxKPi5krPaNlNuo0LPp66cr5qKjYU5pXNHXzv1wk43YtMFc-s1TN-Fnuv__Fz8gex30TO5aXTkkW748IrtfCAmPCY0-D92fmy8S13XfqZJYZ7ZIqtj_c4UD22YR1KsT8jKdzO4faddQgVrEITUtnHQ8ywPLnAeHyAijs9VZKCTiREiFD8Z6kRohwQMHk_PAXTDM5JoVGo3_lAzKeenPSBI8Wm6R5QLhAGgIGrQXEIBJYYNgMCS0F6V6b3kzFFvTkbZiUFEMqhXDkIiv8lZ1s18R2uYiKvt96aj_NqozwEoxRJ45olGG09fraTSdeB6iSz9fxmtyKRAh5en5359-QXZwxJu0NBiRQb1Y-kuyXbnlVaOLH_rN2Zc
link.rule.ids	315,782,786,1455,1509,27933,27934,58021,59734,60523
linkProvider	Taylor & Francis
linkToHtml	http://sdu.summon.serialssolutions.com/2.0.0/link/0/eLvHCXMwrV1LT8MwDI5gHIADb8RgQJG4BrWL2ybHCTYNMXZhCG5Rm8exQ2t32L_H6WNsQnBAHCs3beXG9lfX_kzILShfcWBdqjgzFHioqcCwSCEV1gBPuiotUxcv8fidP_QdTU6v6YVxZZXuG9pWRBGlr3bG7ZLRTUmca-HGSAfMVWbBnQi7seCbZAuxMXP0-ZPB25czDnlNxOxTt6TpnvvhKmvRaY279JuvLgPQYP8fHv2A7NXo0-tV2-WQbJjsiOyucBIeE-rcHnpAPZ15uh7Ak3uu1Wzm5W4E6AIPVFVIUCxOyOugP7kf0nqmAlUIRQoaa6FDFtmAaQMawREGaJUwGwuEiuBzY1NluJ9yAQZCSKPQhtqmQRolQZyg_Z-SVjbNzBnxrEHjjVnEERFAAjaBxHCwEAiuLA-gTWijS_lRUWfIYMlIWqlBOjXISg1twlcVLosyZWGr-SKS_b6007wcWdtgLgMEnxEC0gDFN0sxWo_7JZJkZjp350SCI0iK_PO_3_2abA8nzyM5ehw_XZAdlIRllRp0SKuYzc0l2cz1_KrcmJ_Px927
linkToPdf	http://sdu.summon.serialssolutions.com/2.0.0/link/0/eLvHCXMwpV1LS8NAEF5sBdGDb7FaNYLXlaSZTWaPYlsUpQhW9LYk-zi2pY9D_72zSVpbRA96DJNNwmQeXzYz3zB2AzrUCHGLa4wtBxSGS0qLHHLpLGDW0nmxdfGa9j6w3fE0Ocsufl9W6b-hXUkUUcRq79wj4xYVcb6DmxIdxL4wC26laKUSa2xTIOUrsuh-9_0rFguseJhD7pcsmud-uMpaclqjLv0Wqov80937_5Pvs90KewZ3pbEcsA07OGQ7K4yER4z7oEfxzwzHganG70wC32g2DiZ-AOicDnRZRjCdH7O3bqd__8CriQpcExCZ8tRII-LERbGxYAgaUXrWWexSSUARQrQu1xbDHCVYEJAnwgnj8ihPsijNyPtPWH0wHNhTFjhLrpvGCRIegAxcBplFcBBJ1A4jaDC-UKUalcQZKlrykZZqUF4NqlRDg-GqvtW02LBw5XQRFf--tLl4N6rywImKCHomBEcjEl8vxeQ7_odINrDDmT8nkUgQKQnP_n73K7b10u6q58fe0znbJoEoStSgyerT8cxesNrEzC4Ls_wEIwrcXw
openUrl	ctx_ver=Z39.88-2004&ctx_enc=info%3Aofi%2Fenc%3AUTF-8&rfr_id=info%3Asid%2Fsummon.serialssolutions.com&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Ajournal&rft.genre=article&rft.atitle=Newsvendor+decisions+under+supply+uncertainty&rft.jtitle=International+journal+of+production+research&rft.au=K%C3%A4ki%2C+Anssi&rft.au=Liesi%C3%B6%2C+Juuso&rft.au=Salo%2C+Ahti&rft.au=Talluri%2C+Srinivas&rft.date=2015-03-04&rft.pub=Taylor+%26+Francis&rft.issn=0020-7543&rft.eissn=1366-588X&rft.volume=53&rft.issue=5&rft.spage=1544&rft.epage=1560&rft_id=info:doi/10.1080%2F00207543.2014.952798&rft.externalDocID=952798
thumbnail_l	http://covers-cdn.summon.serialssolutions.com/index.aspx?isbn=/lc.gif&issn=0020-7543&client=summon
thumbnail_m	http://covers-cdn.summon.serialssolutions.com/index.aspx?isbn=/mc.gif&issn=0020-7543&client=summon
thumbnail_s	http://covers-cdn.summon.serialssolutions.com/index.aspx?isbn=/sc.gif&issn=0020-7543&client=summon