Behavioral Tendencies in Newsvendor Decision Making: Capturing the Chinese Perspective

31 Pages Posted: 9 Jan 2011 Last revised: 27 Mar 2011

See all articles by Ying Cui

Ying Cui

affiliation not provided to SSRN

Lucy Chen

affiliation not provided to SSRN

Jian Chen

affiliation not provided to SSRN

Srinagesh Gavirneni

Cornell University - Samuel Curtis Johnson Graduate School of Management

Date Written: January 9, 2011

Abstract

After many decades on focusing only on quantitative approaches for making decisions in manufacturing and supply chain management, researchers in operations management have recently acknowledged the importance of understanding the human behavior tendencies underlying these decisions. The result is a new stream of research in operations management focused on experiments using human subjects. However, most of these experiments were conducted in the US and Europe with the subject pool (students as well as practitioners) with western cultural and educational backgrounds. As the students and practitioners in China are culturally and educationally different from their western counterparts, it is conceivable that their behavioral tendencies are very different. Given that a large portion of the world’s industrial output comes from China, an understanding of the behavioral tendencies specific to those geographical regions is essential to achieve significant efficiency gains in the world economy. We compare results from experiments conducted in the US and China and observe that Chinese decision makers (i) ask a lot more questions before reaching their decision indicating that they are more worried about making the wrong decision; (ii) are more frequently able to come up with a new number as their decision whereas the American decision makers tend to use one of the given numbers as their decision; and (iii) are more cognizant of salvage values and as a result order more than the American decision makers.

Keywords: Behavioral Operations, Cultural Difference, Newsvendor Decisions

JEL Classification: E23

Suggested Citation

Cui, Ying and Chen, Lucy and Chen, Jian and Gavirneni, Srinagesh, Behavioral Tendencies in Newsvendor Decision Making: Capturing the Chinese Perspective (January 9, 2011). Johnson School Research Paper Series No. 24-2011, Available at SSRN: https://ssrn.com/abstract=1737479 or http://dx.doi.org/10.2139/ssrn.1737479

Ying Cui

affiliation not provided to SSRN ( email )

Lucy Chen

affiliation not provided to SSRN ( email )

Jian Chen

affiliation not provided to SSRN ( email )

Srinagesh Gavirneni (Contact Author)

Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )

Ithaca, NY 14853
United States

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