The Laplace distribution is discussed in Appendix 5–D. As noted there, the Laplace distribution could be a good choice for describing demand for slow-moving items and for fast-moving items with high variation. The cdf of the Laplace distribution is given by and the inverse of the cdf is given by where sgn(x) is the sign of x.The mean ismand the variance is Since the inverse distribution function can be written down explicitly, one does not have to resort to tables to solve newsvendor problemswhen demand follows the Laplace distribution.

Solve Problem 10, part (a), assuming the demand for the EX123 follows a Laplace distribution with parameters and (which will give exactly the same mean and variance).