Inventory Investments under Risk & Uncertainty

Abstract

The significance of decisions concerning inventory management determines a firm long-term direction. Almost all the firms face the problems concerning inventory investment decisions. The goal of the research is the analysis of inventory investment decisions made under risk and uncertainty (on the case of Geizer company and experimental study based on Newsvendor Problem). This goal is achieved through the fulfillment of several tasks: analysis inventory investment decisions through behavioral financial approaches; implementation of them on the case of Geizer company; putting their problem into the experimental study based on Newsvendor Problem; processing the results and giving a consultation for Geizer. The results showed that the subjects’ decisions, that are made under uncertainty do not coincide to the theoretical solutions; there is the distinction by gender factor; the learning of participants on their own experience, on the one hand, lead to optimality, on the other hand, the subjects start to make more stable decisions; groups learn faster on their previous experience.