The Loss-averse Newsvendor Model Under Emergency Procurement With Its Extensions

The newsvendor model is one of the fundamental models in stochastic inventory theory, whose objective is to choose an optimal order quantity that balances its cost of ordering too many against its cost of ordering too few. The traditional newsvendor model is based on loss neutrality to maximize its expected profit by selecting an order quantity.However, in practice, many examples show that the retailer's order quantity decisions are always not consistent with maximizing expected profit. Usually, we call the deviation between the retailer's actual order quantity and the profit maximization order quantity as decision bias. The major reason for the decision bias existing is that the retailer usually has preferences other than loss neutrality. Therefore, we study the ordering decisions of loss aversion retailer under emergency procurement with its extensions.We first study the ordering decisions of a loss-averse retailer under emergency procurement and analyze the pricing and ordering decisions of a loss-averse retailer facing loss-averse customers. Then, we discuss the ordering decisions of a loss-averse retailer and the pricing strategies of the supplier when the retailer faces different types of suppliers under emergency procurement. At last, we investigate the retailer's ordering strategies and the supplier's pricing strategies when the retailer has loss aversion and altruism factors.