Journal
OMEGA-INTERNATIONAL JOURNAL OF MANAGEMENT SCIENCE
Volume 63, Issue -, Pages 103-110Publisher
PERGAMON-ELSEVIER SCIENCE LTD
DOI: 10.1016/j.omega.2015.10.006
Keywords
Newsvendor; Price-setting; Strategic consumer behavior; Additive demand; Multiplicative demand
Funding
- National Natural Science Foundation of China (NSFC) [71271106, 71202142]
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We consider a newsvendor who sells a single product over a single season with the objective of determining both the selling price and stock quantity to maximize the expected profit. The customers are strategic and we consider two demand cases: additive and multiplicative. For each case, we derive the newsvendor's optimal decisions and demonstrate that neglecting the price-sensitivity of demand leads the newsvendor to make sub-optimal decisions. Moreover, we show that under certain conditions, strategic consumer behavior may positively affect the newsvendor's optimal expected profit in the additive demand case. (C) 2015 Elsevier Ltd. All rights reserved.
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