Loss-averse newsvendor model under supply uncertainty with additive demand

Based on the traditional newsvendor model, we study the production decisions for a loss-averse retailer under supply and additive demand uncertainties in a fashion supply chain. We demonstrate the existences of the optimal order quantity and price. With numerical study, we show that under the loss-averse behavior, the higher the loss-averse degree, the lower the optimal order quantity, the higher the optimal price. Moreover, we analyze the effect of other parameters on the retailer's optimal decisions.