Mean-downside-risk and mean-variance newsvendor models: Implications for sustainable fashion retailing

Tsan Ming Choi, Chun Hung Chiu

Research output: Journal article publicationJournal articleAcademic researchpeer-review

144 Citations (Scopus)


Newsvendor models have been well-established for studying supply chain management problems with fashionable products. In this paper, we explore the mean-downside-risk (MDR) and mean-variance (MV) newsvendor models under both the exogenous and endogenous retail price decision cases. We first construct analytical models with the MDR and MV objectives. We then show that the analytical solution schemes for both the MDR and MV problems are the same. With the measures for sustainability such as the expected quantity of goods leftover, the expected sales to expected goods leftover ratio, the rate of return on investment, and the probability of achieving a pre-determined profit target, we proceed to compare the levels of sustainability by the fashion retailers which employ the mean-risk and the risk neutral models. Insights are generated.
Original languageEnglish
Pages (from-to)552-560
Number of pages9
JournalInternational Journal of Production Economics
Issue number2
Publication statusPublished - 1 Feb 2012


  • Fashion supply chain management
  • Mean-downside risk analysis
  • Mean-variance analysis
  • Newsvendor problem

ASJC Scopus subject areas

  • Business, Management and Accounting(all)
  • Economics and Econometrics
  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering


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