On learning process of a newsvendor with censored demand information. Issue 9 (1st September 2016)

• Record Type: Journal Article
• Authors: Zhao, Yingshuai; Zhao, Xiaobo; Max Shen, Zuo-Jun
• Is Part Of: Journal of the Operational Research Society. Volume 67:Issue 9(2016)
• Page Start: 1200
• Page End: 1211
• Publication Date: 2016-09-01
• Subjects: censored information -- anchoring and adjustment heuristic -- learning; Operations research -- Periodicals; 658.4034
• DOI: 10.1057/jors.2016.18
• Languages: English
• ISSNs: 0160-5682

Abstract

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.