Suppose a company uses the newsvendor model to manage its in…

Suppose a company uses the newsvendor model to manage its inventories and faces normally distributed demand with mean 10 and standard deviation 10. The company decides to order a quantity that exactly equals its mean demand forecast. The probability of serving all the demand is 50%

Le Meridien in San Francisco has 160 rooms. The hotel has an…

Le Meridien in San Francisco has 160 rooms. The hotel has an ample low fare demand at the room rate of $200 per night, but the demand from the high fare class which pays $450 per night on average, is uncertain. The high fare demand is normally distributed with mean 60 and standard deviation 42. (The Normal distribution table is attached below.)  How many rooms should Le Meridien protect for high fare customers to maximize expected revenue?