Ecological Rationality of Demand Chasing

Posted on Tue 06 May 2014 in Core OM and supply chain • Tagged with demand chasing, behavioral OM

Experimental literature that has looked at newsvendor decision-making documents a phenomenon called demand chasing wherein a decision-maker adjusts her order quantity in each period toward the demand realization in past period. This behavior is so obviously “irrational” (given the typical newsvendor setup where each period’s demand is statistically independent …

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