This preview shows page 1. Sign up to view the full content.
Unformatted text preview: le is the normal distribution. The Newsboy Model
At the start of each day, a newsboy must decide on the
number of papers to purchase. Daily sales cannot be
predicted exactly, and are represented by the random
co = unit cost of overage
cu = unit cost of underage
It can be shown that the optimal number of papers to
purchase is the fractile of the demand distribution given
by F(Q*) = cu
(cu + co ) 2 Newsboy Example
When demand is normal with µ = 11.73 and σ = 4.74,...
View Full Document
This document was uploaded on 03/23/2014.
- Spring '14