Problem

Consider Example 4b of Chapter 4, but now suppose that the seasonal demand is a continuous...

Consider Example 4b of Chapter 4, but now suppose that the seasonal demand is a continuous random variable having probability density function f. Show that the optimal amount to stock is the value s* that satisfies  where b is net profit per unit sale,  is the net loss per unit unsold, and F is the cumulative distribution function of the seasonal demand.

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