Topic of the question is Betting on uncertain demand : the newsvendor model Question 1 . The Penn Bookstore is doing an audit of the magazine procurement process. A consultant recommends an in-stock probability of 80% for all of the magazines they stock. If they follow the consultant's recommendation (and achieve an 80% in-stock probability), what is the expected fraction of their magazines that will experience a stock-out? (in %) Question 2. 1. National Geographic still sells a considerable number of copies. Its demand for the April issue is forecasted to be normally distributed with a mean of 80 and a standard deviation of 35. If the Penn Bookstore stocks 100 copies, how many copies can they expect to return to the publisher at the end of the month? (National Geographic is a monthly periodical.) Question 3. 1. Consider another magazine, Green Business. The forecast for an issue is Poisson with mean 4.25. How many issues should the Penn Bookstore stock if they want to ensure a 99.6% in-stock probability? Question 4. 1. If 6 copies of Green Business is ordered, how many copies of the Green Business should they expect to sell (i.e., expected sales)? (Recall, demand is Poisson with mean 4.25.)