A Note on "The Censored Newsvendor and the Optimal Acquisition of Information"

Abstract: This paper revisits the model of a censored newsvendor by Ding, Puterman and Bisi (2002). An important result claimed there without proper justification is that the myopic order quantity is always less than or equal to the optimal order quantity.  We analyze the same model using the interesting concept of the unnormalized probability which simplifies the dynamic programming equation considerably and facilitates the proof of the claim.