The manager at Sportmart, sporting goods store, has to decide on the number of skis to purchase
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Question:
The manager at Sportmart, sporting goods store, has to decide on the number of skis to purchase for the winter season. Based on past demand data and weather forecast for the year, management has forecasted demand to be normally distributed, with a mean of 450 and a standard deviation of 200. Each pair of skis costs $120 and retails for $250. Any unsold skis at the end of the season are disposed of for $85. What are the expected lost sales when the newsvendor optimal quantity is ordered?
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