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?

Consider the Barnes and Nobles example above, and suppose de…

Consider the Barnes and Nobles example above, and suppose demand is normally distributed with the standard deviation of weekly demand being 20 books. The lead-time is four week. What safety stock is necessary if the manager uses a continuous review inventory system, and a 98% service level (Use z = 2, for 98% service level)?

A small retailer is considering various monthly plans for pu…

A small retailer is considering various monthly plans for purchasing electricity. They can pre-purchase kWhs at the cost of 4.5 cents per kWh.  If they don’t use all of the kWhs they purchase, then there is no refund for the unused electricity. If they need more kWhs than they purchase, the extra kWhs are purchased at the rate of 6 cents per kWh.  Their forecast for kWh usage per month is normally distributed with a mean of 6000 and a standard deviation of 2500. What is the cost of over-estimation?