Research On Newsvendor Behavior Problem Of Two Products With Demand Substitution

The classic newsvendor problem assumes that decision-makers take the expected profit maximization of a single product as the decision-making goal,but in the process of business operation,enterprises often operate a variety of mutually substitutable products at the same time,and decision-makers are affected by the finite rationality factor,their decision-making behavior is deviated from the optimal solution of the decision-making model.Therefore,this paper studies the newsvendor behavior of two products with demand substitution from three aspects:operational research modeling,behavioral experiment and behavioral modeling.Firstly,the newsvendor model is extended from a single product to two products,and considering the demand substitution between products,the operation research model is established and solved with the comprehensive profit maximization of two products as the decision objective.The results show that compared with the newsvendor model of a single product,the optimal order quantity of high-profit products increases,while the optimal order quantity of low-profit products decreases.Secondly,a behavioral experiment was carried out based on the WeChat small program to explore the deviation between the order quantity of the two products and the optimal order quantity of the bounded rational decision maker.The results showed that high-profit products appeared POC effect,while low-profit products appeared PTC effect.Finally,a behavioral model of decision-makers is constructed based on prospect theory,and maximum likelihood estimation and genetic algorithm are used for parameter estimation and model selection.The results show that prospect theory can effectively explain the group decision-making behavior of decision-makers.However,compared with single product decision-making,when facing the problem of two products with demand substitution,decision-makers will take the income of maximum demand as the reference point.This paper helps business managers to make production plans,design contracts and evaluate demand more closely to the actual operating conditions,improve management efficiency and reduce operating costs,which is of great value to production management and ordering decisions,and thus promotes the development of enterprise supply chain management.