IDEAS home Printed from https://ideas.repec.org/a/hin/jnlmpe/6810415.html
   My bibliography  Save this article

Mathematical Modeling for Risk Averse Firm Facing Loss Averse Customer’s Stochastic Uncertainty

Author

Listed:
  • Seungbeom Kim
  • Jinpyo Lee
  • Minjae Park

Abstract

To optimize the firm’s profit during a finite planning horizon, a dynamic programming model is used to make joint pricing and inventory replenishment decision assuming that customers are loss averse and the firm is risk averse. We model the loss averse customer’s demand using the multinomial choice model. In this choice model, we consider the acquisition and transition utilities widely used by a mental accounting theory which also incorporate the reference price and actual price. Then, we show that there is an optimal inventory policy which is base-stock policy depending on the accumulated wealth in each period.

Suggested Citation

  • Seungbeom Kim & Jinpyo Lee & Minjae Park, 2017. "Mathematical Modeling for Risk Averse Firm Facing Loss Averse Customer’s Stochastic Uncertainty," Mathematical Problems in Engineering, Hindawi, vol. 2017, pages 1-9, April.
    • Handle: RePEc:hin:jnlmpe:6810415
    DOI: 10.1155/2017/6810415
    as

    Download full text from publisher

    File URL: http://downloads.hindawi.com/journals/MPE/2017/6810415.pdf
    Download Restriction: no
    File URL: http://downloads.hindawi.com/journals/MPE/2017/6810415.xml
    Download Restriction: no
    File URL: https://libkey.io/10.1155/2017/6810415?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hin:jnlmpe:6810415. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Mohamed Abdelhakeem (email available below). General contact details of provider: https://www.hindawi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.