What is the probability that you will run out of stock


Problem

You are a newsvendor selling San Pedro Times every morning. Before you get to work, you go to the printer and buy the day's paper for $0.50 a copy. You sell a copy of San Pedro Times for $1.35. Daily demand is distributed normally with mean = 350 and standard deviation = 70. At the end of each morning, any leftover copies are worthless and they go to a recycle bin.

1) How many copies of San Pedro Times should you buy each morning?
2) Based on 1, what is the probability that you will run out of stock?

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Supply Chain Management: What is the probability that you will run out of stock
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