{"status":"ok","message-type":"work","message-version":"1.0.0","message":{"indexed":{"date-parts":[[2025,12,5]],"date-time":"2025-12-05T12:01:48Z","timestamp":1764936108969,"version":"build-2065373602"},"reference-count":66,"publisher":"MDPI AG","issue":"7","license":[{"start":{"date-parts":[[2023,6,30]],"date-time":"2023-06-30T00:00:00Z","timestamp":1688083200000},"content-version":"vor","delay-in-days":0,"URL":"https:\/\/creativecommons.org\/licenses\/by\/4.0\/"}],"funder":[{"name":"the National Natural Science Foundation of China","award":["72172091","71931008"],"award-info":[{"award-number":["72172091","71931008"]}]},{"name":"the Key Program of National Natural Science Foundation of China","award":["72172091","71931008"],"award-info":[{"award-number":["72172091","71931008"]}]}],"content-domain":{"domain":[],"crossmark-restriction":false},"short-container-title":["Systems"],"abstract":"<jats:p>To factor in the retailer\u2019s overconfidence when dealing with the inventory problem with supply uncertainty, this paper develops a distributionally robust optimization model by only considering the mean and variance of the yield rate distribution. We first show that overconfidence would prompt the retailer to order more under low-profit conditions, whereas it reduces the order quantity under high-profit conditions. The analysis results imply that the pull-to-center effect still exists when only supply uncertainty applies, and the asymmetry that the deviation is higher under low-profit conditions is proved. The performance of overconfidence is also characterized in the expected profits of both retailer and supplier. Numerical studies show that even though the retailer may suffer losses, the supplier can benefit from the retailer\u2019s overconfidence in the low-profit case, which would positively increase the joint expected profit of the supply chain. Two extensions to the base model are also considered, including the scenario with both demand and supply uncertainties and an overconfident multi-product problem with budget constraints. This research provides tractable results to predict how the decision-maker is biased, and such insights would help the applications of de-biasing techniques in practice.<\/jats:p>","DOI":"10.3390\/systems11070333","type":"journal-article","created":{"date-parts":[[2023,7,3]],"date-time":"2023-07-03T00:42:46Z","timestamp":1688344966000},"page":"333","update-policy":"https:\/\/doi.org\/10.3390\/mdpi_crossmark_policy","source":"Crossref","is-referenced-by-count":4,"title":["The Distributionally Robust Inventory Strategy of the Overconfident Retailer under Supply Uncertainty"],"prefix":"10.3390","volume":"11","author":[{"given":"Dasheng","family":"Wu","sequence":"first","affiliation":[{"name":"Department of Industrial Engineering and Management, Shanghai Jiao Tong University, Shanghai 200240, China"}]},{"ORCID":"https:\/\/orcid.org\/0000-0001-8656-7910","authenticated-orcid":false,"given":"Feng","family":"Chen","sequence":"additional","affiliation":[{"name":"Sino-US Global Logistics Institute, Antai College of Economics and Management, Shanghai Jiao Tong University, Shanghai 200030, China"}]}],"member":"1968","published-online":{"date-parts":[[2023,6,30]]},"reference":[{"key":"ref_1","doi-asserted-by":"crossref","first-page":"634","DOI":"10.1016\/j.agsy.2011.06.006","article-title":"Adaptive optimization of crop production and nitrogen leaching abatement under yield uncertainty","volume":"104","author":"Niemi","year":"2011","journal-title":"Agric. Syst."},{"key":"ref_2","doi-asserted-by":"crossref","first-page":"196","DOI":"10.1016\/j.ijpe.2016.12.032","article-title":"Coordinating VMI supply chain under yield uncertainty: Option contract, subsidy contract, and replenishment tactic","volume":"185","author":"Cai","year":"2017","journal-title":"Int. J. Prod. Econ."},{"key":"ref_3","doi-asserted-by":"crossref","first-page":"1955","DOI":"10.1080\/00207540701666220","article-title":"Random yield and uncertain demand in decentralised supply chains under the traditional and VMI arrangements","volume":"47","author":"Wang","year":"2009","journal-title":"Int. J. Prod. Res."},{"key":"ref_4","doi-asserted-by":"crossref","first-page":"2089","DOI":"10.1111\/poms.12240","article-title":"Pay-back-revenue-sharing contract in coordinating Supply Chains with random yield","volume":"23","author":"Tang","year":"2014","journal-title":"Prod. Oper. Manag."},{"key":"ref_5","doi-asserted-by":"crossref","first-page":"1493","DOI":"10.1287\/opre.1080.0527","article-title":"Supply chain coordination and influenza vaccination","volume":"56","author":"Chick","year":"2008","journal-title":"Oper. Res."},{"key":"ref_6","first-page":"1072","article-title":"Consumption externality and yield uncertainty in the influenza vaccine supply chain: Interventions in demand and supply sides","volume":"58","author":"Deo","year":"2012","journal-title":"Manag. Sci."},{"key":"ref_7","doi-asserted-by":"crossref","first-page":"311","DOI":"10.1287\/opre.43.2.311","article-title":"Lot sizing with random yields: A review","volume":"43","author":"Yano","year":"1995","journal-title":"Oper. Res."},{"key":"ref_8","doi-asserted-by":"crossref","first-page":"103","DOI":"10.1002\/9781118115800.ch5","article-title":"Beyond risk: Ambiguity in supply chains","volume":"Volume 1","author":"Natarajan","year":"2011","journal-title":"Handbook of Integrated Risk Management in Global Supply Chains"},{"key":"ref_9","doi-asserted-by":"crossref","first-page":"362","DOI":"10.1287\/opre.2015.1474","article-title":"Technical Note\u2014Nonparametric Data-Driven Algorithms for Multiproduct Inventory Systems with Censored Demand","volume":"64","author":"Shi","year":"2016","journal-title":"Oper. Res."},{"key":"ref_10","unstructured":"Scarf, H. (1958). Studies in the Mathematical Theory of Inventory and Production, Stanford University Press."},{"key":"ref_11","doi-asserted-by":"crossref","first-page":"54","DOI":"10.1287\/inte.31.6.54.9638","article-title":"Using dynamic programming-based DSS to manage inventory at Jeppesen","volume":"31","author":"Katok","year":"2001","journal-title":"Interfaces"},{"key":"ref_12","doi-asserted-by":"crossref","first-page":"2502","DOI":"10.1287\/mnsc.2013.1715","article-title":"Overconfidence in newsvendor orders: An experimental study","volume":"59","author":"Ren","year":"2013","journal-title":"Manag. Sci."},{"key":"ref_13","doi-asserted-by":"crossref","first-page":"300","DOI":"10.1016\/j.jacceco.2011.01.002","article-title":"Endogenous overconfidence in managerial forecasts","volume":"51","author":"Hilary","year":"2011","journal-title":"J. Account. Econ."},{"key":"ref_14","doi-asserted-by":"crossref","first-page":"631","DOI":"10.1108\/09600030710825694","article-title":"Behavioral supply management: A taxonomy of judgment and decision-making biases","volume":"37","author":"Carter","year":"2007","journal-title":"Int. J. Phys. Distrib. Logist. Manag."},{"key":"ref_15","doi-asserted-by":"crossref","first-page":"171","DOI":"10.1016\/j.pursup.2016.05.001","article-title":"Measuring overconfidence in inventory management decisions","volume":"22","author":"Ancarani","year":"2016","journal-title":"J. Purch. Supply Manag."},{"key":"ref_16","doi-asserted-by":"crossref","first-page":"743","DOI":"10.1080\/00207543.2010.543942","article-title":"Yield management with downward substitution and uncertainty demand in semiconductor manufacturing","volume":"50","author":"Han","year":"2012","journal-title":"Int. J. Prod. Res."},{"key":"ref_17","doi-asserted-by":"crossref","first-page":"563","DOI":"10.1287\/msom.1080.0242","article-title":"Cournot competition under yield uncertainty: The case of the US influenza vaccine market","volume":"11","author":"Deo","year":"2009","journal-title":"Manuf. Serv. Oper. Manag."},{"key":"ref_18","doi-asserted-by":"crossref","first-page":"703","DOI":"10.1080\/07408179708966380","article-title":"Analysis of a deterministic demand production\/inventory system under nonstationary supply uncertainty","volume":"29","author":"Erkip","year":"1997","journal-title":"IIE Trans."},{"key":"ref_19","doi-asserted-by":"crossref","first-page":"239","DOI":"10.1016\/j.ejor.2006.07.011","article-title":"Responsive pricing under supply uncertainty","volume":"182","author":"Tang","year":"2007","journal-title":"Eur. J. Oper. Res."},{"key":"ref_20","doi-asserted-by":"crossref","first-page":"801","DOI":"10.1016\/j.omega.2008.07.006","article-title":"The single-period inventory problem: Extension to random yield from the perspective of the supply chain","volume":"37","author":"Keren","year":"2009","journal-title":"Omega"},{"key":"ref_21","doi-asserted-by":"crossref","first-page":"305","DOI":"10.1287\/msom.1120.0423","article-title":"Advance selling in a supply chain under uncertain supply and demand","volume":"15","author":"Cho","year":"2013","journal-title":"Manuf. Serv. Oper. Manag."},{"key":"ref_22","doi-asserted-by":"crossref","first-page":"125","DOI":"10.1016\/j.ijpe.2016.07.013","article-title":"Supply and demand uncertainty reduction efforts and cost comparison","volume":"180","author":"Begen","year":"2016","journal-title":"Int. J. Prod. Econ."},{"key":"ref_23","doi-asserted-by":"crossref","first-page":"1037","DOI":"10.1016\/j.ejor.2018.12.027","article-title":"Capacity, pricing and production under supply and demand uncertainties with an application in agriculture","volume":"275","author":"Golmohammadi","year":"2019","journal-title":"Eur. J. Oper. Res."},{"key":"ref_24","doi-asserted-by":"crossref","first-page":"439","DOI":"10.1287\/msom.1110.0337","article-title":"Supplier diversification strategies in the presence of yield uncertainty and buyer competition","volume":"13","author":"Tang","year":"2011","journal-title":"Manuf. Serv. Oper. Manag."},{"key":"ref_25","doi-asserted-by":"crossref","first-page":"750","DOI":"10.1111\/poms.13135","article-title":"Offshore versus Onshore Sourcing: Quick Response, Random Yield, and Competition","volume":"29","author":"Jung","year":"2020","journal-title":"Prod. Oper. Manag."},{"key":"ref_26","doi-asserted-by":"crossref","first-page":"105081","DOI":"10.1016\/j.cor.2020.105081","article-title":"A distributionally robust optimization approach for multi-product inventory decisions with budget constraint and demand and yield uncertainties","volume":"126","author":"Qiu","year":"2021","journal-title":"Comput. Oper. Res."},{"key":"ref_27","doi-asserted-by":"crossref","first-page":"317","DOI":"10.1038\/nature10384","article-title":"The evolution of overconfidence","volume":"477","author":"Johnson","year":"2011","journal-title":"Nature"},{"key":"ref_28","doi-asserted-by":"crossref","first-page":"410","DOI":"10.1287\/msom.2.4.410.12339","article-title":"Impact of uncertainty and risk aversion on price and order quantity in the newsvendor problem","volume":"2","author":"Agrawal","year":"2000","journal-title":"Manuf. Serv. Oper. Manag."},{"key":"ref_29","doi-asserted-by":"crossref","first-page":"93","DOI":"10.1016\/j.omega.2006.08.003","article-title":"The loss-averse newsvendor problem","volume":"37","author":"Wang","year":"2009","journal-title":"Omega"},{"key":"ref_30","doi-asserted-by":"crossref","first-page":"502","DOI":"10.1037\/0033-295X.115.2.502","article-title":"The trouble with overconfidence","volume":"115","author":"Moore","year":"2008","journal-title":"Psychol. Rev."},{"key":"ref_31","doi-asserted-by":"crossref","first-page":"404","DOI":"10.1287\/mnsc.46.3.404.12070","article-title":"Decision bias in the newsvendor problem with a known demand distribution: Experimental evidence","volume":"46","author":"Schweitzer","year":"2000","journal-title":"Manag. Sci."},{"key":"ref_32","doi-asserted-by":"crossref","first-page":"496","DOI":"10.1057\/s41274-016-0103-5","article-title":"The overconfident newsvendor","volume":"68","author":"Ren","year":"2017","journal-title":"J. Oper. Res. Soc."},{"key":"ref_33","doi-asserted-by":"crossref","first-page":"2637","DOI":"10.1287\/mnsc.2016.2469","article-title":"Overconfident competing newsvendors","volume":"63","author":"Li","year":"2016","journal-title":"Manag. Sci."},{"key":"ref_34","doi-asserted-by":"crossref","first-page":"108299","DOI":"10.1016\/j.ijpe.2021.108299","article-title":"Make-to-order supply chain coordination through option contract with random yields and overconfidence","volume":"242","author":"Wang","year":"2021","journal-title":"Int. J. Prod. Econ."},{"key":"ref_35","doi-asserted-by":"crossref","first-page":"108515","DOI":"10.1016\/j.cie.2022.108515","article-title":"Pricing strategy in a dual-channel supply chain with overconfident consumers","volume":"172","author":"Liu","year":"2022","journal-title":"Comput. Ind. Eng."},{"key":"ref_36","doi-asserted-by":"crossref","first-page":"1347","DOI":"10.1111\/poms.12981","article-title":"Overconfident distribution channels","volume":"28","author":"Li","year":"2019","journal-title":"Prod. Oper. Manag."},{"key":"ref_37","doi-asserted-by":"crossref","first-page":"162","DOI":"10.1016\/j.cor.2018.04.003","article-title":"Optimization on pricing and overconfidence problem in a duopolistic supply chain","volume":"101","author":"Xu","year":"2019","journal-title":"Comput. Oper. Res."},{"key":"ref_38","doi-asserted-by":"crossref","first-page":"102430","DOI":"10.1016\/j.tre.2021.102430","article-title":"Ordering and interest rate strategies in platform finance with an overconfident and commerce retailer","volume":"153","author":"Liu","year":"2021","journal-title":"Transp. Res. Part E Logist. Transp. Rev."},{"key":"ref_39","doi-asserted-by":"crossref","first-page":"207","DOI":"10.1016\/j.ejor.2022.05.042","article-title":"Allocation of inventory responsibilities in overconfident supply chains","volume":"305","author":"Hao","year":"2023","journal-title":"Eur. J. Oper. Res."},{"key":"ref_40","doi-asserted-by":"crossref","first-page":"166","DOI":"10.1016\/j.ejor.2019.02.023","article-title":"The overconfident and optimistic price-setting newsvendor","volume":"277","author":"Kirshner","year":"2019","journal-title":"Eur. J. Oper. Res."},{"key":"ref_41","doi-asserted-by":"crossref","first-page":"108066","DOI":"10.1016\/j.ijpe.2021.108066","article-title":"Inventory strategy of the risk averse supplier and overconfident manufacturer with uncertain demand","volume":"234","author":"Song","year":"2021","journal-title":"Int. J. Prod. Econ."},{"key":"ref_42","doi-asserted-by":"crossref","first-page":"854","DOI":"10.1016\/j.ejor.2019.06.036","article-title":"Controlling risk and demand ambiguity in newsvendor models","volume":"279","author":"Rahimian","year":"2019","journal-title":"Eur. J. Oper. Res."},{"key":"ref_43","doi-asserted-by":"crossref","first-page":"825","DOI":"10.1057\/jors.1993.141","article-title":"The distribution free newsboy problem: Review and extensions","volume":"44","author":"Gallego","year":"1993","journal-title":"J. Oper. Res. Soc."},{"key":"ref_44","doi-asserted-by":"crossref","first-page":"537","DOI":"10.1057\/jors.1995.73","article-title":"The distribution free newsboy problem with balking","volume":"46","author":"Moon","year":"1995","journal-title":"J. Oper. Res. Soc."},{"key":"ref_45","doi-asserted-by":"crossref","first-page":"1101","DOI":"10.1287\/mnsc.47.8.1101.10231","article-title":"An adaptive, distribution-free algorithm for the newsvendor problem with censored demands, with applications to inventory and distribution","volume":"47","author":"Godfrey","year":"2001","journal-title":"Manag. Sci."},{"key":"ref_46","doi-asserted-by":"crossref","first-page":"465","DOI":"10.1016\/j.ijpe.2004.06.043","article-title":"The distribution-free newsboy problem: Extensions to the shortage penalty case","volume":"93","author":"Alfares","year":"2005","journal-title":"Int. J. Prod. Econ."},{"key":"ref_47","doi-asserted-by":"crossref","first-page":"1269","DOI":"10.1080\/00207721.2013.815828","article-title":"A distribution-free newsvendor problem with nonlinear holding cost","volume":"46","author":"Pal","year":"2015","journal-title":"Int. J. Syst. Sci."},{"key":"ref_48","doi-asserted-by":"crossref","first-page":"1625","DOI":"10.1287\/mnsc.2015.2391","article-title":"Closed-form solutions for robust inventory management","volume":"63","author":"Mamani","year":"2017","journal-title":"Manag. Sci."},{"key":"ref_49","doi-asserted-by":"crossref","first-page":"217","DOI":"10.1016\/j.ijpe.2010.10.009","article-title":"The effect of advertising on the distribution-free newsboy problem","volume":"129","author":"Lee","year":"2011","journal-title":"Int. J. Prod. Econ."},{"key":"ref_50","doi-asserted-by":"crossref","first-page":"532","DOI":"10.1080\/00207543.2014.957875","article-title":"Effects of carbon emission regulations on remanufacturing decisions with limited information of demand distribution","volume":"53","author":"Liu","year":"2015","journal-title":"Int. J. Prod. Res."},{"key":"ref_51","doi-asserted-by":"crossref","first-page":"260","DOI":"10.1016\/j.cie.2016.05.042","article-title":"The distributionally robust newsvendor problem with dual sourcing under carbon tax and cap-and-trade regulations","volume":"98","author":"Bai","year":"2016","journal-title":"Comput. Ind. Eng."},{"key":"ref_52","doi-asserted-by":"crossref","first-page":"1927","DOI":"10.1111\/poms.13239","article-title":"A review of robust operations management under model uncertainty","volume":"30","author":"Lu","year":"2021","journal-title":"Prod. Oper. Manag."},{"key":"ref_53","doi-asserted-by":"crossref","first-page":"1128","DOI":"10.1287\/opre.1060.0318","article-title":"Expected Value of Distribution Information for the Newsvendor Problem","volume":"54","author":"Yue","year":"2006","journal-title":"Oper. Res."},{"key":"ref_54","doi-asserted-by":"crossref","first-page":"188","DOI":"10.1287\/opre.1070.0486","article-title":"Regret in the Newsvendor Model with Partial Information","volume":"56","author":"Perakis","year":"2008","journal-title":"Oper. Res."},{"key":"ref_55","doi-asserted-by":"crossref","first-page":"640","DOI":"10.1080\/10556788.2013.768994","article-title":"Newsvendor optimization with limited distribution information","volume":"28","author":"Zhu","year":"2013","journal-title":"Optim. Methods Softw."},{"key":"ref_56","doi-asserted-by":"crossref","first-page":"3146","DOI":"10.1287\/mnsc.2017.2773","article-title":"Asymmetry and ambiguity in newsvendor models","volume":"64","author":"Natarajan","year":"2018","journal-title":"Manag. Sci."},{"key":"ref_57","doi-asserted-by":"crossref","first-page":"535","DOI":"10.1287\/opre.2014.1262","article-title":"A risk-and ambiguity-averse extension of the max-min newsvendor order formula","volume":"62","author":"Han","year":"2014","journal-title":"Oper. Res."},{"key":"ref_58","doi-asserted-by":"crossref","first-page":"1008","DOI":"10.1007\/s10957-016-0870-9","article-title":"Robust Optimization for the Loss-Averse Newsvendor Problem","volume":"171","author":"Yu","year":"2016","journal-title":"J. Optim. Theory Appl."},{"key":"ref_59","first-page":"250","article-title":"Optimal inventory policy","volume":"19","author":"Arrow","year":"1951","journal-title":"Econom. J. Econom. Soc."},{"key":"ref_60","doi-asserted-by":"crossref","first-page":"519","DOI":"10.1287\/msom.1060.0190","article-title":"Learning by doing in the newsvendor problem: A laboratory investigation of the role of experience and feedback","volume":"10","author":"Bolton","year":"2008","journal-title":"Manuf. Serv. Oper. Manag."},{"key":"ref_61","doi-asserted-by":"crossref","first-page":"2225","DOI":"10.1287\/mnsc.1120.1550","article-title":"Managers and students as newsvendors","volume":"58","author":"Bolton","year":"2012","journal-title":"Manag. Sci."},{"key":"ref_62","doi-asserted-by":"crossref","first-page":"1891","DOI":"10.1287\/mnsc.1100.1225","article-title":"Reference dependence in multilocation newsvendor models: A structural analysis","volume":"56","author":"Ho","year":"2010","journal-title":"Manag. Sci."},{"key":"ref_63","doi-asserted-by":"crossref","first-page":"237","DOI":"10.1016\/j.geb.2014.03.012","article-title":"Impulse balance in the newsvendor game","volume":"86","author":"Ockenfels","year":"2014","journal-title":"Games Econ. Behav."},{"key":"ref_64","doi-asserted-by":"crossref","first-page":"106689","DOI":"10.1016\/j.cie.2020.106689","article-title":"The overconfident and ambiguity-averse newsvendor problem in perishable product decision","volume":"148","author":"Wu","year":"2020","journal-title":"Comput. Ind. Eng."},{"key":"ref_65","doi-asserted-by":"crossref","first-page":"140","DOI":"10.1111\/poms.12899","article-title":"A meta-analysis of newsvendor experiments: Revisiting the pull-to-center asymmetry","volume":"28","author":"Zhang","year":"2019","journal-title":"Prod. Oper. Manag."},{"key":"ref_66","doi-asserted-by":"crossref","first-page":"1544","DOI":"10.1080\/00207543.2014.952798","article-title":"Newsvendor decisions under supply uncertainty","volume":"53","author":"Salo","year":"2015","journal-title":"Int. J. Prod. Res."}],"container-title":["Systems"],"original-title":[],"language":"en","link":[{"URL":"https:\/\/www.mdpi.com\/2079-8954\/11\/7\/333\/pdf","content-type":"unspecified","content-version":"vor","intended-application":"similarity-checking"}],"deposited":{"date-parts":[[2025,10,10]],"date-time":"2025-10-10T20:03:31Z","timestamp":1760126611000},"score":1,"resource":{"primary":{"URL":"https:\/\/www.mdpi.com\/2079-8954\/11\/7\/333"}},"subtitle":[],"short-title":[],"issued":{"date-parts":[[2023,6,30]]},"references-count":66,"journal-issue":{"issue":"7","published-online":{"date-parts":[[2023,7]]}},"alternative-id":["systems11070333"],"URL":"https:\/\/doi.org\/10.3390\/systems11070333","relation":{},"ISSN":["2079-8954"],"issn-type":[{"type":"electronic","value":"2079-8954"}],"subject":[],"published":{"date-parts":[[2023,6,30]]}}}