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Empirical newsvendor biases: Are target service levels achieved effectively and efficiently?

Research output: Contribution to Journal/Magazine › Journal article › peer-review

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Empirical newsvendor biases: Are target service levels achieved effectively and efficiently? / Sachs, Anna-Lena; Becker-Peth, Michael; Minner, Stefan et al.
In: Production and Operations Management, Vol. 31, No. 4, 30.04.2022, p. 1839-1855.

Research output: Contribution to Journal/Magazine › Journal article › peer-review

Harvard

Sachs, A-L, Becker-Peth, M, Minner, S & Thonemann, UW 2022, 'Empirical newsvendor biases: Are target service levels achieved effectively and efficiently?', Production and Operations Management, vol. 31, no. 4, pp. 1839-1855. https://doi.org/10.1111/poms.13650

APA

Sachs, A.-L., Becker-Peth, M., Minner, S., & Thonemann, U. W. (2022). Empirical newsvendor biases: Are target service levels achieved effectively and efficiently? Production and Operations Management, 31(4), 1839-1855. https://doi.org/10.1111/poms.13650

Vancouver

Sachs AL, Becker-Peth M, Minner S, Thonemann UW. Empirical newsvendor biases: Are target service levels achieved effectively and efficiently? Production and Operations Management. 2022 Apr 30;31(4):1839-1855. Epub 2021 Dec 21. doi: 10.1111/poms.13650

Author

Sachs, Anna-Lena ; Becker-Peth, Michael ; Minner, Stefan et al. / Empirical newsvendor biases : Are target service levels achieved effectively and efficiently?. In: Production and Operations Management. 2022 ; Vol. 31, No. 4. pp. 1839-1855.

Bibtex

@article{0405d03bb58c435199075bb5a4973daf,
title = "Empirical newsvendor biases: Are target service levels achieved effectively and efficiently?",
abstract = "Human decision making in the newsvendor context has been analyzed intensively in laboratory experiments, where various decision biases have been identified. However, it is unclear whether the biases also exist in practice. We analyze the ordering decisions of a manufacturer who faces a multiproduct newsvendor problem with an aggregate service-level constraint. We find that the manufacturer broadly exhibits the same biases as subjects in the laboratory and is prone to another bias that has not been identified before, that is, group aggregation. The bias can be attributed to the multi-product problem of the manufacturer, and refers to the observation that the service levels are not optimized for individual products, but rather for product groups. Our data allow us to analyze the performance of a manufacturer in detail and we find that target service levels are achieved effectively, but not efficiently. We provide rationales for the manufacturer's ordering behavior, discuss managerial implications, and quantify the financial benefits of debiasing ordering decisions.",
keywords = "behavioral operations, decision analysis, empirical decision making, multi-product, newsvendor, service level contract",
author = "Anna-Lena Sachs and Michael Becker-Peth and Stefan Minner and Thonemann, {Ulrich W.}",
year = "2022",
month = apr,
day = "30",
doi = "10.1111/poms.13650",
language = "English",
volume = "31",
pages = "1839--1855",
journal = "Production and Operations Management",
issn = "1059-1478",
publisher = "Wiley-Blackwell",
number = "4",

}

RIS

TY - JOUR

T1 - Empirical newsvendor biases

T2 - Are target service levels achieved effectively and efficiently?

AU - Sachs, Anna-Lena

AU - Becker-Peth, Michael

AU - Minner, Stefan

AU - Thonemann, Ulrich W.

PY - 2022/4/30

Y1 - 2022/4/30

N2 - Human decision making in the newsvendor context has been analyzed intensively in laboratory experiments, where various decision biases have been identified. However, it is unclear whether the biases also exist in practice. We analyze the ordering decisions of a manufacturer who faces a multiproduct newsvendor problem with an aggregate service-level constraint. We find that the manufacturer broadly exhibits the same biases as subjects in the laboratory and is prone to another bias that has not been identified before, that is, group aggregation. The bias can be attributed to the multi-product problem of the manufacturer, and refers to the observation that the service levels are not optimized for individual products, but rather for product groups. Our data allow us to analyze the performance of a manufacturer in detail and we find that target service levels are achieved effectively, but not efficiently. We provide rationales for the manufacturer's ordering behavior, discuss managerial implications, and quantify the financial benefits of debiasing ordering decisions.

AB - Human decision making in the newsvendor context has been analyzed intensively in laboratory experiments, where various decision biases have been identified. However, it is unclear whether the biases also exist in practice. We analyze the ordering decisions of a manufacturer who faces a multiproduct newsvendor problem with an aggregate service-level constraint. We find that the manufacturer broadly exhibits the same biases as subjects in the laboratory and is prone to another bias that has not been identified before, that is, group aggregation. The bias can be attributed to the multi-product problem of the manufacturer, and refers to the observation that the service levels are not optimized for individual products, but rather for product groups. Our data allow us to analyze the performance of a manufacturer in detail and we find that target service levels are achieved effectively, but not efficiently. We provide rationales for the manufacturer's ordering behavior, discuss managerial implications, and quantify the financial benefits of debiasing ordering decisions.

KW - behavioral operations

KW - decision analysis

KW - empirical decision making

KW - multi-product

KW - newsvendor

KW - service level contract

U2 - 10.1111/poms.13650

DO - 10.1111/poms.13650

M3 - Journal article

VL - 31

SP - 1839

EP - 1855

JO - Production and Operations Management

JF - Production and Operations Management

SN - 1059-1478

IS - 4

ER -