Newsvendor Game - NVG
Consider a manager who faces a short selling season. Due to obsolescence of the product, the manager cannot store inventory from one selling season to the next. Furthermore, the selling season is not long enough for the manager to place a second (production) order and receive the shipment during the season. Hence, the manager has to order and stock inventory prior to the selling season. Alas! Demand is also uncertain. How many items should the manager order before the selling season starts?
Several managers from various industries face such notoriously difficult decisions. A newsvendor located at the corner of a street has to decide how many copies of a particular issue of a magazine she has to stock. A garment retailer, who sells fashion items with a short selling season, has to decide how many items she has to stock in her retail store.
A toy manufacturer has to decide how many items to manufacture in Asia and ship to North American retailers who sell during the Christmas season… Examples are abound.
Historically, researchers motivated the aforementioned inventory management problem under demand uncertainty with the newsvendor narrative. Hence, we follow this tradition and name our game as the Newsvendor Game (NVG).
In this game, each player manages a bagel store. Each day, before opening the store, the player decides how many bagels to order, with an objective to maximize profits to satisfy uncertain customer demand.