Retailer's order behavior by considering waste-averse preferences and stockout-averse preferences

Aiming at the risk-neutral assumption of decision maker in newsvendor model,the waste-averse preference and the stockout-averse preference were introduced to research the retailers'inventory order behavior,and the result showed that the retailer's decision behavior was impacted by waste-averse preference and stockout-averse preference.The order quantity was positive with the stockout-averse preference and negative with the waste-averse preference.The simulation experiment indicated that the retailers were influenced by stockout-averse and waste-averse preference in low-profit/high-profit scene respectively,and the pull to center phenomena was appeared in retailer's order behavior.The pull to center phenomena was explained from the viewpoint of retailer's decision behavior,and it was found that the retailer anchored on the optimal solution of newsvendor model and then adjusted to the direction of demand distribution mean when they did the inventory decision.The degree of adjustment was impacted by the coefficient of waste-averse preference and stockout-averse preference,and adjustment behavior was accorded with the characteristics of prospect theory value function curve.Fitting the value function curves of inventory adjustment behavioral was fitted though simulation experiments,and some advice to reduce the averse preference were given.