Product satisfying assumptions of the newsvendor model

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Consider a product satisfying assumptions of the newsvendor model. Demand ~ Normal[μ=1000, σ=200]. Purchase cost: $100 / unit. For every unit sold, there is a profit of $30 per unit. (Revenue = cost + profit = 100 + 30 = $130). Unsold units are disposed off at a loss of value: $20 per Unit (therefore V=$80).

1. What is the mean demand?

2. What is the newsvendor critical ratio?

Reference no: EM131283894

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