We propose a new newsvendor model with the focus theory of choice. Instead of calculating the expected utility, the model conceives that a retailer evaluates each order quantity by examining the most salient demand for him/her. The proposed model is a bilevel optimization problem with maximin...

Static stochastic optimization problems are formulated with the focus theory of choicein which instead of using the expected utility in the existing approaches, the optimal solution isdetermined as per which solution’s focus (the most salient realization of a random vector) is the...