You are a newsvendor selling the San Pedro Times every morning. Before you get to work, you go to the printer and buy the day’s paper for $ 0.25 a copy. You sell a copy of the San Pedro Times for $ 1.00. Daily demand is distributed normally with mean = 250 and standard deviation = 50. At the end of each morning, any leftover copies are worthless and they go to a recycle bin.
a. How many copies of the San Pedro Times should you buy each morning?
b. Based on part (a), what is the probability that you will run out of stock?

  • CreatedApril 09, 2014
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