This paper studies the impact of strategic customer behavior on supply chain performance. We start with a newsvendor seller facing forward-looking customers. The seller initially charges a regular price but may salvage the leftover inventory at a lower salvage price after random demand is...

This paper studies the role of product availability in attracting consumer demand. We start with a newsvendor model, but additionally assume that stockouts are costly to consumers. The seller sets an observable price and an unobservable stocking quantity. Consumers anticipate the likelihood of...

Many theoretical models adopt a normative approach and assume that decision-makers are perfect optimizers. In contrast, this paper takes a descriptive approach and proposes a decision framework of bounded rationality, in which decision-makers are prone to errors and biases. In our model, while...

We conduct an experimental study on the decision biases in a scenario where two newsvendors compete a common market, in which if stockout happens at a newsvendor, the unsatisfied demand is reallocated to his/her competitor. Following the existing theory, an experiment of competing game with...

Because inventory systems are managed or heavily influenced by decision makers, understanding human behaviors in inventory management has become an important research topic. Based on newsvendor decisions, in the literature, it has been argued that a few methods (e.g., ex-post inventory error,...

Prospect theory shows that human behavior in decision making can often be characterized by an S-shaped utility function. In this paper, we consider a periodic review inventory system with an exponential-type S-shaped utility function. The objective is to maximize the total expected utility over...