Risk-averse Newsvendor Model With Random Capacity And Penalty Lost

The newsvendor model is one of the basic models in supply chain management.The research object of the classic newsvendor model is the optimal ordering decision of a retailer when the product is placed in a single cycle and the demand is uncertain.The decision variable of the classic newsvendor problem is the retailer’s optimal order quantity.The goal of decision-making is to maximiaze the expected profit.Since the classic newsvendor problem does not consider other factors besides demand uncertainty,such as uncertain purchase price,random leadtime,random capacity,etc.On the other hand,as the market competition becomes more and more fierce,retailers also pay more and more attention to operational management risks,and risk control has become the focus of retailers’ concern.Therefore,this paper studies the risk-averse newsvendor model with random capacity and penalty lost.In this paper,we study the impact of penalty lost on inventory decisions in the newsvendor model with random demand and capacity under the CVaR,VaR,and mean-CVaR risk measurement criteria.For the case of CVaR risk measurement criteria,the optimal order quantity of newsvendor with random capacity and penalty lost is obtained;and it is found that when there is an penalty lost,the optimal order quantity depends on the distribution of demand,the distribution of random capacity,the size of the penalty lost and the degree of risk avoidance.For the case of VaR risk measurement criteria,the optimal order quantity of newsvendor under the VaR risk measurement criteria with random capacity and penalty lost is obtained,and it is proved that there is a specific level of risk avoidance.When the retailer’s risk avoidance level is greater than a specific risk avoidance level,the random capacity causes the order quantity to increase;when the retailer’s risk avoidance level is less than a specific risk avoidance level,the random capacity causes the order quantity to decrease.Finally,for the case of the mean-CVaR risk measurement criterion,the optimal order quantity of newsvendor with random capacity and penalty lost is obtained,and the effect of weight on the optimal order quantity is explained through numerical simulation.