The decision maker’s perception of regret affects a company’s inventory control and pricing decisions. In this paper, we investigate how regret aversion behaviors affect the inventory control and pricing decisions under a newsvendor setting. To capture the regret aversion behaviors of the newsvendor, we provide a regret aversion utility function. Based on the built regret aversion utility function and the classic inventory control and pricing model, we construct utility function by integrating the profit utility and the regret aversion utility, and then analyze the conditions of optimal solution on the inventory and pricing policy under additive and multiplicative demand in details. Further, by the analysis of properties and numerical study, we show that the optimal policy for regret-averse newsvendor deviates from the one for regret-neutral newsvendor and changes with the regret aversion parameters to varying degree. We also show the impact tendency of newsvendor’s regret aversion behaviors on the optimal inventory and pricing policy under the additive and multiplicative demand.
Accepté le :
DOI : 10.1051/ro/2017005
Mots clés : Inventory control, pricing, regret aversion, behavioral operations management
@article{RO_2017__51_4_1033_0,
author = {Cao, Bing-Bing and Fan, Zhi-Ping and Li, Hongyan and You, Tian-Hui},
title = {Inventory control and pricing for regret-averse newsvendor},
journal = {RAIRO - Operations Research - Recherche Op\'erationnelle},
pages = {1033--1054},
publisher = {EDP-Sciences},
volume = {51},
number = {4},
year = {2017},
doi = {10.1051/ro/2017005},
mrnumber = {3783933},
zbl = {1393.90142},
language = {en},
url = {http://archive.numdam.org/articles/10.1051/ro/2017005/}
}
TY - JOUR AU - Cao, Bing-Bing AU - Fan, Zhi-Ping AU - Li, Hongyan AU - You, Tian-Hui TI - Inventory control and pricing for regret-averse newsvendor JO - RAIRO - Operations Research - Recherche Opérationnelle PY - 2017 SP - 1033 EP - 1054 VL - 51 IS - 4 PB - EDP-Sciences UR - http://archive.numdam.org/articles/10.1051/ro/2017005/ DO - 10.1051/ro/2017005 LA - en ID - RO_2017__51_4_1033_0 ER -
%0 Journal Article %A Cao, Bing-Bing %A Fan, Zhi-Ping %A Li, Hongyan %A You, Tian-Hui %T Inventory control and pricing for regret-averse newsvendor %J RAIRO - Operations Research - Recherche Opérationnelle %D 2017 %P 1033-1054 %V 51 %N 4 %I EDP-Sciences %U http://archive.numdam.org/articles/10.1051/ro/2017005/ %R 10.1051/ro/2017005 %G en %F RO_2017__51_4_1033_0
Cao, Bing-Bing; Fan, Zhi-Ping; Li, Hongyan; You, Tian-Hui. Inventory control and pricing for regret-averse newsvendor. RAIRO - Operations Research - Recherche Opérationnelle, Tome 51 (2017) no. 4, pp. 1033-1054. doi : 10.1051/ro/2017005. http://archive.numdam.org/articles/10.1051/ro/2017005/
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