Behavioral inventory decisions: The newsvendor and other inventory settings

Michael Becker-Peth, UW Thonemann

Research output: Chapter/Conference proceedingChapterAcademic

14 Citations (Scopus)

Abstract

We summarize the literature on human decision-making in the newsvendor model. In the newsvendor model, a decision maker faces stochastic demand and must determine the order quantity. Consistent findings in the literature are that people choose order quantities that are between expected-profit-maximizing quantities and mean demand and that they vary over time. We discuss how deviations of people’s orders from the expected-profit-maximizing quantities can be explained by decision biases and alternative utility functions. We also discuss how heterogeneity among people can explain between-subject variety, present alternative behavioral models, and identify potential areas for future research.

Original languageEnglish
Title of host publicationThe Handbook of Behavioral Operations
EditorsK. Donohue, E. Katok, S. Leider
Place of PublicationHoboken
PublisherJohn Wiley & Sons Inc.
Chapter11
Pages393-432
Number of pages40
ISBN (Electronic)9781119138341
ISBN (Print)9781119138303
DOIs
Publication statusPublished - 1 Jan 2019

Bibliographical note

Publisher Copyright:
© 2019 John Wiley & Sons, Inc.

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