On demand uncertainty in the newsvendor model

On demand uncertainty in the newsvendor model

I provide three comparative statics involving the level of demand uncertainty for the newsvendor model, two of which lead to robust predictions. I show that for distributions of demand that are greater in the dispersive order, both the expected (censored) sales and share of inventory sold fall. Thes...

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Bibliographic Details
Main Author: Andrew Butters, R. (Author)
Format: Article
Language:English
Published: Elsevier B.V. 2019
Subjects:
Censored demand
Demand uncertainty
Dispersive order
Inventory
Monotone comparative statics
Newsvendor model
Online Access:View Fulltext in Publisher
Description
Summary:I provide three comparative statics involving the level of demand uncertainty for the newsvendor model, two of which lead to robust predictions. I show that for distributions of demand that are greater in the dispersive order, both the expected (censored) sales and share of inventory sold fall. These monotone comparative statics occur despite the lack of one for the (optimal) inventory choice. © 2019 Elsevier B.V.
ISBN:01651765 (ISSN)
DOI:10.1016/j.econlet.2019.108746

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