A Bayesian approach to determine the value of information in the newsboy problem

• Published in: International journal of production economics Vol. 112; no. 1; pp. 391 - 402
• Main Author: Lee, Chih-Ming
• Format: Journal Article
• Language: English
• Published: Amsterdam Elsevier B.V 01.03.2008; Elsevier; Elsevier Sequoia S.A
• Series: International Journal of Production Economics
• Subjects: Bayesian analysis; Decision making models; Demand analysis; Forecasting; Information; Newsboy problems; Studies; Value of information; Newsboy problems; Value of information; Forecasting; Bayesian analysis

The potential benefits of demand forecasting in a newsboy problem are to decrease the risk of overstocking or shortage, but forecasting is usually not free. In this paper, a model to help the decision-maker in a newsboy problem to assess the value of information is presented. First, two cases on ava...