Firms can benefit from inaccurate market beliefs

Qijun Qiu; Li Jiang

doi:10.1016/j.orl.2020.12.006

Firms can benefit from inaccurate market beliefs

Qijun Qiu, Li Jiang

Department of Logistics and Maritime Studies

Research output: Journal article publication › Journal article › Academic research › peer-review

Abstract

A supplier sells to a retailer who serves a market with uncertain demand. Before the season starts, the retailer preorders from the supplier, who stocks to satisfy at least the preorder. After the actual demand is realized, the retailer can place an at-once order, which is satisfied up to stock availability. Market demand, as perceived by a firm, can differ from what it actually is. We find that a firm can benefit from holding an inaccurate market belief.

Original language	English
Pages (from-to)	150-156
Number of pages	7
Journal	Operations Research Letters
Volume	49
Issue number	1
DOIs	https://doi.org/10.1016/j.orl.2020.12.006
Publication status	Published - Jan 2021

Keywords

Contracting arrangement
Market belief
Newsvendor

ASJC Scopus subject areas

Software
Management Science and Operations Research
Industrial and Manufacturing Engineering
Applied Mathematics

More information

10.1016/j.orl.2020.12.006

http://hdl.handle.net/10397/89834

Cite this

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title = "Firms can benefit from inaccurate market beliefs",

abstract = "A supplier sells to a retailer who serves a market with uncertain demand. Before the season starts, the retailer preorders from the supplier, who stocks to satisfy at least the preorder. After the actual demand is realized, the retailer can place an at-once order, which is satisfied up to stock availability. Market demand, as perceived by a firm, can differ from what it actually is. We find that a firm can benefit from holding an inaccurate market belief.",

keywords = "Contracting arrangement, Market belief, Newsvendor",

author = "Qijun Qiu and Li Jiang",

note = "Funding Information: The authors are grateful to Professor Mahesh Nagarajan, an associate editor and two anonymous referees for their comments and guidance that have significantly improved the presentation and content of the paper. This research is supported in part by National Natural Science Foundation of China (Grant # 72001115) , Natural Science Foundation of the Jiangsu Higher Education Institutions of China (Grant # 20KJB410006) , Humanities and Social Sciences Foundation of Ministry of Education of China (Grant # 20YJC630041) , and Startup Foundation for Introducing Talent of NUIST, China (Grant # 2019r067 ). Publisher Copyright: {\textcopyright} 2020 Elsevier B.V.",

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Firms can benefit from inaccurate market beliefs

Abstract

Keywords

ASJC Scopus subject areas

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