Newsvendor Models for Innovative Products with Inventory Inaccuracies

In recent years, there has been growing interest in the inventory inaccuracies in the newsvendor problems, which are costly and prevalent in many industries. Innovative products, which are characterized with short lifecycle and unpredictable demand, are especially suffered by the inventory inaccuracies. Based on the one-shot decision theory (OSDT), a scenario-based inventory model (newsvendor-OSDT) has been proposed for the newsvendor problems for innovative products. In this article, within the framework of newsvendor-OSDT, we consider two cases: (a) the retailer ignores the inventory errors; (b) RFID technology is used to reduce or eliminate the errors. Based on the theoretical analysis and computational simulation, the article aims at addressing the questions: does the inventory inaccuracy tackled using newsvendor-OSDT? Within the framework of newsvendor-OSDT, does the RFID contribute to the inventory inaccuracies? This article will construct the newsvendor models for innovative products with inventory inaccuracies and put forward managerial implications.