The Newsvendor Pricing Problem With Distributed Price Commitment

Newsvendor model is the research basis of some management science problems,and there are a lot of research results about it.For the classical newsvendor model,which is usually thought of as rational,its research issues are to find ordering and pricing strategies.Now,one of generalization of classical the newsvendor model is to study the problems of ordering and pricing strategies when the newsvendor is loss-averse.This problem is basically similar to the classical.Another generalization of the newsvendor model is to assume that customers are loss averse.In this setting,we must focus on both newsvendor and customers.In this paper,we study the problem of newsvendor with random reference points and loss aversion.In this paper,we mainly study a newsvendor selling perishable goods with a given consumption value to consumers,and assume that the market size of each sales period is random.When faced with loss-averse consumers with random reference points,newsvendors need to solve the problem of pricing and inventory of goods during a single sale.Considering the distribution of reference points,consumers will make a purchase plan before purchasing goods in order to maximize their expected total utility.In chronological order,the model is mainly composed of two steps.Firstly,the interaction between the newsvendor’s business decision on ordering and pricing and the consumer’s purchasing behavior is analyzed,and the consumer’s prior utility function is analyzed to provide the distribution of the selling price to the market,so as to improve their own income.Secondly,consumers form their own random reference points according to the price distribution disclosed by newsvendors,and then give purchase strategies.In equilibrium,it is assumed that the distribution of reference points is consistent with consumer beliefs.Under the framework of this endogenous reference point,we fully describe how loss aversion of consumers affects the optimal operation strategy of newsvendor,which forms a sharp contrast.