Business, 25.04.2020 04:52 cami30031cami3003

A company uses the newsvendor model to manage its inventories and faces normally distributed demand with a coefficient of variation of 0.75. The company decides to order a quantity that exactly equals the mean of its demand forecast.
Which of the following is true regarding this company’s performance measures?

a. There is a 0.50 probability that there is enough inventories to serve all demand.
b. The expected inventory equals 50% of the mean of the demand forecast.
c. The stockout probability is 25%.

Answers: 3

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A company uses the newsvendor model to manage its inventories and faces normally distributed demand...