Problem $20-10($Algo$)$

References

You are a newsvendor selling San Pedro Times every morning. Before you get to work, you go to the printer and buy the day's paper

for $$0\mathrm{.}30$ a copy. You sell a copy of San Pedro Times for $$1\mathrm{.}25.$ Daily demand is distributed normally with mean $=275$ and standard

deviation $=55.$ At the end of each morning, any leftover copies are worthless and they go to a recycle bin.

a$.$ How many copies of San Pedro Times should you buy each morning? $($Use Excel's NORMSINV$()$ function to find the correct critical

value for the given $-$level. Round your $z-$value to $2$ decimal places and final answer to to $2$ decimal places.$)$

Optimal order quantity

b$.$ Based on a$,$ what is the probability that you will run out of stock? $($Round your answer to the nearest whole number.$)$

Probability