Store A orders on a weekly basis. Its weekly demand is 50 units with a standard deviation of ?ve units. The
holding cost is $10 per unit per week and a 0.99 in—stock probability is desired. What is Store A's average
on-hand inventory if lead time is five weeks? A. 2500.00 B. 285.40 C. 250.00 D. 28.54

 

The newsvendor model also called single-period model is nothing but the mathematical model which is used to determine the optimal quantity of perishable product that needs to maintained which is calculated based on fixed price and uncertain demand. Since the product is perishable and demand is uncertain the unsold items are worthless at the end of the day so newsvendor problem is solved to identify the optimal inventory level.

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