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 should the reorder point be (assuming 50 weeks per year)?
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Consider two products A and B that have identical cost, retail price and demand distribution and the same short selling season (the summer months from May through August). The newsvendor model is used to manage inventory for both products. Product A is to be discontinued at the end of the season this year, and the leftovers will be salvaged at 75% of the cost. Product B will be re-offered next summer, so any leftovers this year can be carried over to the next year while incurring a holding cost on each unit left over equal to 20% of the product’s cost. How do the stocking quantities for these products compare?
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