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

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.

MoreLess

Year of publication:	2014
Authors:	Wang, Charles X. ; Webster, Scott ; Zhang, Sidong
Published in:	International Journal of Production Economics. - Elsevier, ISSN 0925-5273. - Vol. 154.2014, C, p. 100-112
Publisher:	Elsevier
Subject:	Inventory \| Pricing \| Newsvendor model \| Robust optimization

More details

Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://ebvufind01.dmz1.zbw.eu/10010869189