TY - JOUR A2 - Wang, Huanqing AU - Kim, Seungbeom AU - Lee, Jinpyo AU - Park, Minjae PY - 2017 DA - 2017/04/11 TI - Mathematical Modeling for Risk Averse Firm Facing Loss Averse Customer’s Stochastic Uncertainty SP - 6810415 VL - 2017 AB - To optimize the firm’s profit during a finite planning horizon, a dynamic programming model is used to make joint pricing and inventory replenishment decision assuming that customers are loss averse and the firm is risk averse. We model the loss averse customer’s demand using the multinomial choice model. In this choice model, we consider the acquisition and transition utilities widely used by a mental accounting theory which also incorporate the reference price and actual price. Then, we show that there is an optimal inventory policy which is base-stock policy depending on the accumulated wealth in each period. SN - 1024-123X UR - https://doi.org/10.1155/2017/6810415 DO - 10.1155/2017/6810415 JF - Mathematical Problems in Engineering PB - Hindawi KW - ER -