A comparative study to find the optimal ordering quantity of the risk-neutral and risk-averse newsvendor

In the classical newsvendor problem, it is considered that the newsvendor is risk-neutral and the Optimal Ordering Quantity (OOQ) was found which maximizes the newsvendor expected profit. In the real world, different investors have different attitudes towards risk. Accordingly, this paper considers the utility function which is commonly being used to model the attitude of the investor who makes the investment decision to maximize his expected utility instead of expected profit. This study considers the quadratic utility function and demonstrates that it can be used to describe the riskaverse as well as a risk-neutral investor with some conditions. Finally, by considering the risk profile of the investor at different levels of investor initial wealth, we have developed a method to determine the OOQ which maximizes the expected utility. From the numerical examples, it is clear that the OOQ and hence the expected utility varies depending on an investor’s attitude toward the risk and investment decision. At different levels of initial wealth, the attitudes toward the risk of the investors are different and the sensitivity analysis demonstrates how an investor can choose the initial wealth and OOQ to maximize his expected utility

Abstracts of International Conference on Innovations in Business Management

This book contains abstracts of the various research ideas of the academic community and practitioners of management presented at the International Conference on Innovations in Business Management (ICIBM 2020). The researchers have contributed toward various themes of the conference such as sustainable economy, supply chain, women-empowerment, export-import, microfinance, government policies, etc. We strongly believe that it will open up further scope for in-depth research in various disciplines of business management. Best wishes to the participants to have detailed discussions on the above-said wide range of areas. Conference Title: International Conference on Innovations in Business ManagementConference Acronym: ICIBM 2020Conference Date: 16-17 January 2020Conference Location: ICFAI University, Dehradun, IndiaConference Organizers: ICFAI Business School, ICFAI University, Dehradun, India & University of Derby, United Kingdo