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Show a graph of holding cost, backorder cost, and total cost by round for your supply chain. The Newsvendor model does not fit here, because
Show a graph of holding cost, backorder cost, and total cost by round for your supply chain. The Newsvendor model does not fit here, because operations last more than one period, but we can use it to think about service. The Newsvendor ratio here would be (shortage cost)/(shortage cost holding cost) = 10/(10 5) = 0.67. Aiming for this service rate would result in more inventory and fewer backorders, but total holding cost would approximately equal total backorder cost. Did your team tend to have excess inventory or rather excess backorders
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