# Question

Consider Example 4b of Chapter 4, but now suppose that the seasonal demand is a continuous random variable having probability density function f. Show that the optimal amount to stock is the value s∗ that satisfies

F(s∗) = b / b + ℓ

where b is net profit per unit sale, ℓ is the net loss per unit unsold, and F is the cumulative distribution function of the seasonal demand.

F(s∗) = b / b + ℓ

where b is net profit per unit sale, ℓ is the net loss per unit unsold, and F is the cumulative distribution function of the seasonal demand.

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