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J. Open Innov. Technol. Mark. Complex. 2018, 4(1), 1; https://doi.org/10.1186/s40852-017-0078-8 (registering DOI)

Comparing validity of risk measures on newsvendor models in open innovation perspective

1
Division of Business Administration, Yonsei University, Wonju 26493, Republic of Korea
2
Department of Business Administration, Sangji University, Wonju 26339, Republic of Korea
3
Department of Business Administration and Accounting, Hanbat National University, Daejeon 34158, Republic of Korea
*
Author to whom correspondence should be addressed.
Received: 30 September 2017 / Accepted: 30 November 2017 / Published: 3 January 2018
PDF [422 KB, uploaded 6 June 2018]

Abstract

In the era of Industry 4.0, firms are facing with greater uncertainty. Accordingly, it is important to select quality risk measures to analyze newsvendor problems under risk. Then, open innovation can be a good remedial option for such risk-averse newsvendors because open innovation can offset the profit losses from risk aversion by sharing revenues in supply chains. To find such risk measures in newsvendor problems, we review various risk measures of risk-averse inventory models and existing articles in inventory management literature. Then we provide a logical reasoning and axiomatic framework to evaluate validity of each risk measure in newsvendor problems - consistency to the four axioms in coherent risk measures. In this framework, the underlying assumptions and managerial insights to the newsvendor problems are examined for each risk measure. Consequently, exponential utility function and coherent measures of risk are selected as two plausible risk measures to analyze multi-product risk-averse newsvendor models.
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (CC BY 4.0).

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Choi, S.; Park, K.; Shim, S.-O. Comparing validity of risk measures on newsvendor models in open innovation perspective. J. Open Innov. Technol. Mark. Complex. 2018, 4, 1.

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J. Open Innov. Technol. Mark. Complex. EISSN 2199-8531 Published by MDPI AG, Basel, Switzerland RSS E-Mail Table of Contents Alert
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