A CVaR‐based newsvendor problem with emergent replenishment: Risk aversion and information updating

This paper investigates a newsvendor problem with emergent replenishment under conditional value at risk (CVaR). We characterize the optimal ordering decisions under CVaR by the first‐order condition and examine the effects of risk‐averse level, emergent order capacity, and cost parameters on optimal regular order decisions under general demand distribution. Additionally, we establish a threshold for fixed cost on the optimal supplier selection. Furthermore, we find that the CVaR value under uniform distribution is equivalent to the expectation of a two‐ or three‐point discrete distribution. When the retailer is not very conservative and the emergent order capacity is relatively small, the retailer prefers overseas suppliers to save costs. Conversely, retailers with a very conservative attitude will tend to choose a domestic supplier to fulfill regular orders.