The Evolution of Real Newsboy Contracts in the US
MIT Zaragoza International Logistics Program; INCAE Business School
Instituto de Empresa Business School Working Paper No. WP 06/16
Perhaps the two most wildly recognized building blocks of inventory theory are the EOQ and the "newsboy" or "newsvendor" models. Moreover, almost the entire supply chain contract literature was built around the latter. The idea behind this paper is the following: before we can even attempt to generalize insights from the model to other situations, we must understand its limitations when applied to the very apparent reason for its existence: actual newsboys. However, a study of present newsboys contracts is almost futile without a deep understanding of the chain of events that lead to its present form. This paper attempts to respond the following questions: When and how have newsboy contracts evolved in the US through the years? Did circumstances change in a way that impacted the types of contracts out there? Why is it that today, of all possible contracts, the wholesale price full returns contract prevails?
Number of Pages in PDF File: 24
Keywords: Newsboy, newsvendor, history, US, contracts
JEL Classification: Z00, O51
Date posted: September 17, 2007
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