Stochastic comparisons in a price-dependent newsvendor problem with emergency procurement精选.pdfVIP

Stochastic Comparisons in a Price-Dependent Newsvendor Problem with Emergency Procurement Minghui Xu Xiaolin Xu School of Economics and Management School of Business Wuhan University Nanjing University Wuhan 430072, P. R. China Nanjing 210093, P. R. China Email: xu mingh@ Email: xuxl@ Abstract—We consider a newsvendor problem with price- tion (see e.g., Petruzzi and Dada 1999[1], and Agrawal and dependent demand and emergency purchase option allowed after Seshadri 2000[7]), we study the effects of demand uncertainty the realization of random demand. By stochastic comparisons, we of both settings. investigate the effects of demand uncertainty on pricing and order quantity decisions as well as expected profit of the newsvendor, The other stream is on the stochastic comparison method- under second order stochastic dominance. Our findings include: ology in operations management. Gerchak and Mossman (i) in general, a less variable demand shock leads to a higher (1992)[8] show that a less variable demand through risk expected profit for both additive and multiplicative demand pooling does not necessarily lead to a lower order quantity in models; (ii) a less variable demand shock has no effect on price a newsvendor setting. Song (1994)[9] indicates that a larger for the additive demand model, while leads to a higher price leadtime demand under second order stochastic