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a. How many newspapers should Sheen stock (i.e., order from the printer)? Use the simulation in the spreadsheet Hamptonshire Express: Problem #1 to identify the
a. How many newspapers should Sheen stock (i.e., order from the printer)? Use the simulation in the spreadsheet "Hamptonshire Express: Problem #1" to identify the optimal stocking quantity. What is the profit at this stocking quantity? b. Verify that the value derived in part (a) is consistent with the optimal stocking quantity in the Newsvendor model.2 1 You can download all spreadsheets from . 2 The optimal stocking quantity in the Newsvendor model can be shown to be * = u + ("(-" ) , where u and o are the mean and standard C, +C. deviation of the demand distribution and () (.) is the inverse of the standard normal distribution function. In Excel, Q* = 4 + Normsinv(Cu/(CutC.)) or Q* = Norminv(Cu/(Cu+Co), H, a)
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