Liking and Following and the Newsvendor: Operations and Marketing Policies Under Social Influence

@article{Hu2014LikingAF,
  title={Liking and Following and the Newsvendor: Operations and Marketing Policies Under Social Influence},
  author={Ming Hu and Joseph M. Milner and Jiahua Wu},
  journal={Inventory Management eJournal},
  year={2014}
}
We consider a monopolistic firm selling two substitutable products to a stream of sequential arrivals whose purchase decisions can be influenced by earlier purchases. Before demand realizes, the firm faces a newsvendor problem for the two products with economies of scale in production for each. When consumers are responsive to others’ decisions, social influence amplifies demand uncertainty, leading to a lower profit for the firm. We propose three solutions for the firm to better cope with or… 

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