The equilibrium order quantity of the regretful newsvendors generally presents the pull-to-center effect, leading to lower profits. This study finds that a target-setting approach which serves as a pervasive mechanism adopted by the manager can effectively counteract this bias. Rich literature finds that the regret bias makes newsvendors worse in practice; however, there is a lack of efficient and costless approaches to solving this issue. This study combines the target-setting with the regret model by considering reference dependence and loss aversion to characterize newsvendors’ utility under target-setting. The two effects are proven to interact with each other and jointly decide whether it turns out to be overordering or underordering. Interestingly, a high profit-margin target or a strong loss aversion may result in an effect opposite to the pull-to-center effect. Excluding selling high-margin products with a stronger aversion to leftover regret, the manager can motivate regretful newsvendors to select the profit-maximizing order quantity through target-setting. We extend our study to the selling-to-newsvendor setting and further verify that newsvendors’ regret bias may benefit the supply chain and can be exploited by the supplier. Significantly, target-setting may even help achieve supply chain coordination under a simple wholesale price. This study provides instructions for managers to avoid firms’ profit loss and achieve the maximum channel profit.

中文翻译：

---

通过目标设定管理令人遗憾的报童和供应链绩效

遗憾报童的均衡订单量普遍呈现中心拉动效应，导致利润下降。本研究发现，目标设定方法作为管理者采用的普遍机制，可以有效抵消这种偏见。丰富的文献发现，后悔偏见会让报童在实践中表现更差。然而，缺乏有效且无成本的方法来解决这个问题。本研究将目标设定与后悔模型结合起来，考虑参考依赖和损失厌恶来表征报童在目标设定下的效用。事实证明，这两种效应相互作用，共同决定结果是排序过高还是排序不足。有趣的是，高利润率目标或强烈的损失厌恶可能会产生与拉向中心效应相反的效应。排除销售那些对留下遗憾有更强厌恶感的高利润产品，经理可以通过目标设定来激励后悔的报童选择利润最大化的订单数量。我们将研究扩展到报童销售环境，并进一步验证报童的后悔偏见可能有利于供应链并可以被供应商利用。值得注意的是，目标设定甚至可能有助于在简单的批发价格下实现供应链协调。本研究为管理者避免企业利润损失、实现渠道利润最大化提供了指导。