#### Bayesian and Adaptive Controls for a Censored Newsvendor
Facing Exponential Demand

**Abstract: **The newsvendor
problem is relatively easy to solve when the distribution of demand for
newspapers is known. When the demand is unknown, the newsvendor faces a dual
problem in the sense of Feldbaum to choose a decision variable that maximizes
profit in the present period, and choose a large enough "observation window" to
be able to view the process correctly so that consistent parameter estimation
can occur. This is a difficult problem in general. In this paper, we treat a
special case when the newsvendor faces exponential demand, independently and
identically distributed with unknown mean.