Question

University of Florida football programs are printed 1 week prior to each home game. Attendance averages 90,000 screaming and loyal Gators​ fans, of whom​ two-thirds usually buy the​ program, following a normal​ distribution, for ​$55 each. Unsold programs are sent to a recycling center that pays only 10 cents per program. The standard deviation is 10,000 ​programs, and the cost to print each program is ​$11.

Refer to the standard normal table

LOADING...

for​ z-values.

​a) What is the cost of underestimating demand for each​ program?

Upper C Subscript sCsequals=​$4.004.00

​(round your response to two decimal​ places).

​b) What is the overage cost per​ program?

Upper C Subscript oCoequals=​$0.900.90

​(round your response to two decimal​ places).

​c) How many programs should be ordered per​ game? ____ ​(round your response to the nearest whole​ number).

​d) What is the stockout risk for this order​ size?

Stockout risk = _____ ​(round your response to four decimal​ places).

Need help with C & D

Answer 1

The newsvendor model also called single-period model is nothing but the mathematical model which is used to determine the optimal quantity of perishable product that needs to maintained which is calculated based on fixed price and uncertain demand. Since the product is perishable and demand is uncertain the unsold items are worthless at the end of the day so newsvendor problem is solved to identify the optimal inventory level.