The curve below shows the probability distribution for anewsvendor’s daily customer demand for a newspaper. The newsvendor purchasesnewspapers at the beginning of the day, sells the papers during the day, and atthe end of the day, collects a salvage value
for each unsold paper.

Z-score =

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In this case, the demand distribution is normal, with amean of 50 newspapers and a standard deviation of 10 newspapers.

Optimal Stocking Quantity = 10 newspapers

When calculating initial stock level, round up.

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