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Cited by 240Supply Chain and Inventory ManagementConsumer Market Behavior and PricingSustainable Supply Chain Management

The DOI matches its Crossref record; 35 of the 35 references it cites were found in a registry or an index.

Note: The Newsvendor Model with Endogenous Demand

Dana, James D., Petruzzi, Nicholas C.·2001·Management Science
DOI 10.1287/mnsc.47.11.1488.10252
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Abstract

This paper considers a firm's price and inventory policy when it faces uncertain demand that depends on both price and inventory level. The authors extend the classic newsvendor model by assuming that expected utility maximizing consumers choose between visiting the firm and consuming an exogenous outside option. The outside option represents the utility the consumer forgoes when she chooses to visit the firm before knowing whether or not the product will be available. The authors investigate both the case in which the firm's price is exogenous and the case in which price is chosen optimally. The paper makes two contributions. First, the authors show that the firm holds more inventories, provides a higher fill rate, attracts more customers, and earns higher profits when it internalizes the effect of its inventory on demand. Second, the authors show that in the endogenous price case the firm's two-dimensional decision problem can be reduced to two, sequential, single-variable optimizations. As a result, the endogenous-price case is as easy to solve as the exogenous-price case.

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Crossref · 10.1287/mnsc.47.11.1488.10252

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Citations

Cites

Show all 35 references

Research works printed but not linked: 8

  1. Balakrishnan A., 2000, Lot sizing with demand-stimulating inventories
  2. Carlton D. W., 1978, Amer. Econom. Rev., 68, 571
  3. Eilon S., 1965, Oper. Res.-Verfahen, 3, 65
  4. Fergani Y. A market oriented stochastic inventory model (1976) (Stanford University, Stanford, CA) . Ph.D. dissertation
  5. Mahajan S., Oper. Res.
  6. Nahmias S., 1997, Production amd Operations Analysis
  7. Porteus E. L., 1990, Handbooks in OR and MS, 2, 605
  8. Young L., 1978, New Zealand Oper. Res., 6, 157

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Metadata

Authors
Dana, J. D., & Petruzzi, N. C.
Affiliations
  • Northwestern University (US)
  • University of Illinois Urbana-Champaign (US)
ORCID
Petruzzi, Nicholas C.
Venue
Management Science
Publisher
Institute for Operations Research and the Management Sciences (INFORMS)
Published
2001-11
Volume
47
Issue
11
Pages
1488-1497
ISSN
  • 0025-1909 (ISSN-L)
  • 1526-5501
DOI
10.1287/mnsc.47.11.1488.10252
OpenAlex
W2119350633
Cited by
239
References
35
Citations by year
2026: 5 · 2025: 4 · 2024: 5 · 2023: 9 · 2022: 8 · 2021: 14 · 2020: 8 · 2019: 7 · 2018: 13 · 2017: 16 · 2016: 15 · 2015: 13 · 2014: 13 · 2013: 11 · 2012: 21
FWCI
7.79
Type
journal article
Language
en
Open access
closed
Locations
Management Science (publishedVersion)
Topics
  • Social Sciences › Decision Sciences › Management Science and Operations Research › Supply Chain and Inventory Management
  • Social Sciences › Business, Management and Accounting › Marketing › Consumer Market Behavior and Pricing
  • Social Sciences › Business, Management and Accounting › Strategy and Management › Sustainable Supply Chain Management
Keywords
newsvendor model, endogenous demand, inventory management, fill rate, expected utility, outside options, optimal pricing, sequential optimization, demand uncertainty, customer acquisition

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