News Vendor's Ordering Decision with Incomplete Supplementary Information

The news vendor's ordering decision is impacted by the supplementary information obtained from the ordering decision point. The newsvendor cannot get the complete conditional probability and marginal probability when the supplementary information is incomplete. Thus, it cannot obtain the optimal ordering decision with a Bayesian decision and the expected utility theory. Combined with the expected utility theory, this paper establishes a newsvendor ordering decision model under the incomplete supplementary information from the perspective of likelihood probability distribution set, and the newsvendor's optimal ordering decision is deduced. By analyzing the model, we came to the following conclusions. The newsvendor's ordering decision depends on its comprehension for the decision knowledge under the incomplete supplementary information. Finally, the model's availability is examined by a numerical example.