Wednesday, June 27, 2012

LAU Nelson, BEARDEN J. Neil
Newsvendor Demand Chasing Revisited Management Science 59, 5 (2013) 1245-1249

Existing research on newsvendor behavior asserts that individuals engage in demand chasing – adjusting their order quantities towards prior demand. Several metrics have been used to identify this heuristic. Via simulation, current metrics are shown to yield excessive false positives, indicating demand chasing when the true order generating process is independent of prior demand. A simple correlation measure does not suffer from this problem, and is proposed as an alternative to some of the more commonly used measures.