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Use the newsvendor framework to determine the optimal number of homepage impressions to promise its advertisers for the next quarter. Assume that advertisers are willing
Use the newsvendor framework to determine the optimal number of homepage impressions to promise its advertisers for the next quarter. Assume that advertisers are willing to pay $10 CPM under a reservation contract but will impose 10% under-delivery penalty. If an impression is not already contracted for, then Break will have to sell it on the Ad Exchange. Break can expect to receive about $3 CPM on the exchange. Break forecasts that its next quarter user visits to be normally distributed with a mean of 1 10M and a standard deviation of 9M
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