Evaluating Alternative Frequentist Inferential Approaches for Optimal Order Quantities in the Newsvendor Model under Exponential Demand. International Transactions in Operational Research 20(6): 837-857

Evaluating Alternative Frequentist Inferential Approaches for Optimal Order Quantities in the Newsvendor Model under Exponential Demand. International Transactions in Operational Research 20(6): 837-857 (SCOPUS, ISI Listed, Impact factor: 0.977 and 5-year: 1.103). In common with I. Kevork (2013).

Three estimation policies for the optimal order quantity of the classical newsvendor model are evaluated in this paper when the demand is exponentially distributed. The evaluation is performed analytically for different combination of sizes for the sample and the requested critical fractile. The statistical measures which have been chosen to perform the evaluation are: (a) the actual critical fractile, namely, the actual probability for the estimated order quantities to meet the demand of the period, (b) the mean square error of the estimators for the optimal order quantity, and (c), the range of deviations of estimated order quantities from the optimal order quantity, provided that the probability to take such a range is the same for the three estimation policies. For small and moderate sample sizes, no estimation policy predominates over the other two, and the choice should be made on a subjective base accordingly to the individual preferences of researchers or practitioners.