Learning-by-Doing in the Newsvendor Problem: A Laboratory Investigation of the Role of Experience and Feedback

Manufacturing and Service Operations Management, Forthcoming

Posted: 22 Jul 2007

See all articles by Gary E. Bolton

Gary E. Bolton

Pennsylvania State University - Department of Supply Chain & Information Systems

Elena Katok

University of Texas at Dallas

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Abstract

We investigate learning-by-doing in the newsvendor inventory problem. An earlier study observed that decision makers tend to anchor their orders around average demand and fail to adjust sufficiently towards the expected profit-maximizing order. Principles of behavioral theory suggest some relatively simple interventions into the decision maker's experience and feedback that might improve performance, and these guide our investigation. The results imply that the institutional organization of experience and feedback may have a significant influence on whether inventory is stocked optimally.

Keywords: Newsvendor problem, feedback, behavioral operations management, supply chain management, experimental economics

Suggested Citation

Bolton, Gary Eugene and Katok, Elena, Learning-by-Doing in the Newsvendor Problem: A Laboratory Investigation of the Role of Experience and Feedback. Manufacturing and Service Operations Management, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1002108

Gary Eugene Bolton

Pennsylvania State University - Department of Supply Chain & Information Systems ( email )

Dept. of Supply Chain & Information Systems
University Park, PA 16802-3306
United States
814-865-0611 (Phone)
814-863-2381 (Fax)

Elena Katok (Contact Author)

University of Texas at Dallas ( email )

Jindal School of Management
800 W. Campbell Dr.
Richardson, TX 75080
United States

HOME PAGE: http://www.utdallas.edu/~ekatok/

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