Description Usage Arguments Details Value References See Also Examples

Implements the newsboy (or newsvendor) model with normal demand.

1 |

`m` |
Mean demand during the period |

`sd` |
Standard deviation of demand during the period |

`p` |
The selling price, where p > c |

`c` |
Uhe unit cost |

`s` |
The salvage value (default:0), where s < c |

When the demand is a random variable with normal distribution,
the optimal stocking quantity that minimize the expected cost is:
*Q=m+z*sd*, where z is known as the safety factor and
*Q - m=z*sd* is known as the safety stock.
'Note that the newsboy problem is not formulated in terms of per unit holding cost *h=c-s* and penalty cost *b=p-c*.

A list containing:

`Q` |
Optimal order-up-to quantity |

`SS` |
Safety stock |

`ExpC` |
Expected cost |

`ExpP` |
Expected profit |

`CV` |
Coefficient of variation of the demand |

`FR` |
Fill rate, the fraction of demand served from stock |

`z` |
Safety factor |

- Porteus E. L. (2002) Foundations of Stochastic Inventory Theory, Stanford University Press, Stanford, CA.

- Gallego G. (1995) Newsvendor Problem. IEOR 4000 Production Management.

- Ayhan, Hayriye, Dai, Jim, Foley, R. D., Wu, Joe, (2004): Newsvendor Notes, ISyE 3232 Stochastic Manufacturing & Service Systems.

EOQ, EPQ, WW, SS

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 | ```
## Not run:
# Example Porteus #
# Suppose demand is normally distributed with mean 100 and standard
# deviation 30. If p = 4 and c = 1, then CR = 0.75 and Q=120.23.
# Note that the order is for 20.23 units (safety stock) more than the
# mean. Note also that ExpC(120.23) = 38.13 and ExpP(120.23)=261.87,
# with FR=0.96.
## End(Not run)
Newsboy(100,30,4,1)
## Not run:
# Example Gallego #
# Suppose demand is normal with mean 100 and standard deviation 20. The
# unit cost is 5, the holding and penalty cost are 1 and 3
# respectively. From the definition of the holding and penalty
# cost we find that p=4, then CR = 0.75 and Q = 113.49. Notice that the
# order is for 13.49 units (safety stock) more than the mean,
# ExpC(113.49) = 25.42 and ExpP(113.49) = 274.58, with fill rate of
# 97 percent.
## End(Not run)
Newsboy(100,20,4,1)
``` |

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