Newsvendor Model
The newsvendor (or newsboy or single-period) model is a mathematical model in operations management and applied economics used to determine optimal inventory levels. It is (typically) characterized by fixed prices and uncertain demand for a perishable product. If the inventory level is, each unit of demand above is lost. This model is also known as the Newsvendor Problem or Newsboy Problem by analogy with the situation faced by a newspaper vendor who must decide how many copies of the day's paper to stock in the face of uncertain demand and knowing that unsold copies will be worthless at the end of the day.
Read more about Newsvendor Model: History, Profit Function
Famous quotes containing the word model:
“Socrates, who was a perfect model in all great qualities, ... hit on a body and face so ugly and so incongruous with the beauty of his soul, he who was so madly in love with beauty.”
—Michel de Montaigne (1533–1592)