Abstract
We present a mean–variance analysis of the single-product, single-period, price-setting newsvendor problem with additive, price-dependent demand. The main goal of this paper is to use a mean–variance framework to solve any risk-sensitive instance and find conditions under which the unimodality of the problem is guaranteed. We introduce such conditions via the lost sales rate elasticity, the elasticity of the optimal price, and the elasticity of the expected safety stock surplus to provide managerial insight in terms of the newsvendor’s level of service. We also simplify the optimization problem in case that those conditions do not hold. The main contribution of this paper is that, by evaluating the unimodality of the problem for any possible risk attitude, it extends previously published results found for the concavity of the solution in risk-neutral and moderately risk-sensitive cases.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
