You are a newsvendor selling Stockton Herald every morning. You buy the the day’s paper $0.25 per copy. You sell each newspaper for $1.0. Daily demand is distributed normally with mean of 250 newspapers and standard deviation of 50 newspapers. At the end of each morning, any leftover copies are worthless and they go to a recycle bin.
a) How many copies should you buy each morning?
b) Based on part a), what is the probability that you will run out of stock?