263. Resilience and emergency orders: An experimental investigation of newsvendor recourse
Invited abstract in session TB-33: Behavioural operations 1, stream Behavioural OR.
Tuesday, 10:30-12:00Room: Maurice Keyworth 1.31
Authors (first author is the speaker)
| 1. | B Vipin
|
| Department of Management Studies, Indian Institute of Technology Madras | |
| 2. | Mohd Mujahid Khan
|
| Department of Management Sciences, Indian Institute of Technology Kanpur, India |
Abstract
This study experimentally investigates the ordering behavior of newsvendors under the recourse option in both monopolistic and duopoly markets. We design between-subject experiments to compare monopoly vs. duopoly treatments and duopoly at low-profit vs. high-profit margins. In the duopoly market setting, we consider two identical newsvendors selling the same perishable goods in a common market. We use the proportional demand allotment rule. Our results show that market orders systematically deviate from equilibrium, exhibiting a pull-to-center pattern: average orders fall below equilibrium in high-profit margin conditions and above equilibrium in low-profit margin conditions. Under the recourse option, orders in the duopoly market are significantly higher than in the monopolistic market. We also find asymmetry in ordering tendencies at different profit margins. We explain the ordering behavior using a statistical model, which accounts for all the major observations: pull-to-center effects, demand chasing, and asymmetry. Our research highlights the need to model individual and strategic behavior for supply chain resilience and offers strategies for managing supply chain disruptions, especially during costly emergency orders.
Keywords
- Behavioural OR
- Inventory
- Supply Chain Management
Status: accepted
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