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Journal of the Operational Research Society

, Volume 67, Issue 9, pp 1200–1211 | Cite as

On learning process of a newsvendor with censored demand information

  • Yingshuai Zhao
  • Xiaobo ZhaoEmail author
  • Zuo-Jun Max Shen
General Paper

Abstract

A behavioural study on the newsvendor problem without demand distribution knowledge or realized demands is conducted. We configure a censored-information scenario, where only sales data in history are provided. With laboratory experiments, we analyse participants ordering levels and ordering oscillations over time. It is observed that participants perform a significant learning process in the censored-information scenario. Moreover, we find that participants make orders by anchoring on the previous-period sales and adjusting to an adapted inventory level. On the basis of the observations, we propose an exponential-type learning (EXP) model to describe the behaviour of decision makers. Comparing with a chasing model that is popularly used in the full-information scenario, the EXP model is more recommended in the censored-information scenario.

Keywords

censored information anchoring and adjustment heuristic learning 

Notes

Acknowledgements

The authors would like to thank the editor and anonymous referees for their valuable suggestions and comments that led to improvement of the paper. This research is supported by NSF of China [grant number 71210002].

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Copyright information

© The Operational Research Society 2016

Authors and Affiliations

  1. 1.University of CologneCologneGermany
  2. 2.Tsinghua UniversityBeijingChina
  3. 3.University of CaliforniaBerkeleyUSA

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