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:
“The playing adult steps sideward into another reality; the playing child advances forward to new stages of mastery....Child’s play is the infantile form of the human ability to deal with experience by creating model situations and to master reality by experiment and planning.”
—Erik H. Erikson (20th century)