Should they stock more or less than the average

Reference no: EM133662483

Question: The so-called newsvendor model compares the net salvage cost to the (opportunity) cost of stocking out (this opportunity cost is typically the unit contribution margin) and tells us whether to order more or less than the estimated average demand. If the net salvage cost is $15, but the opportunity cost of a lost sale is $10 should they stock more or less than the average?

Reference no: EM133662483

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