1. Under what condition(s), the profit maximization order quantity is larger than expected demand in Newsvendor model?

2. Explain the possible impact(s) of anincreasein lead time on on-hand inventory and stock-out probability in order-up-to model?

3. You are managing a business that design products for specific medical purposes. Your potential demand is very short lived and uncertain. Your production cycle is very long which means you need to have the products ready in advance. If the demand for your product arises (only 30% chance), they will be sold well; if not, the products will remain unsold and you will need to liquidate them for 500 each. You predict that the demand will be normally distributed with mean= 15000 and standard deviation= 7000. The production cost of your product is, on average, $5500. You will sell your product for $12500. Suppose you make 18000 products and you get lucky and demand will occur this year. What is your expected profit?