Uses the news vendor model to manage its inventories

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A company uses the news vendor model to manage its inventories and faces normally distributed demand with a coefficients of variation=0.75. The company decides to order a quantity that exactly equals the mean of its demand forecast. Which of the following is true regarding this company’s performance measures? a. There is a 0.50 probability that there is enough inventories to serve all demand. B. expected inventory equals 50% of the mean of the demand forecast. C. the stockout probability is 25%.

Reference no: EM131773946

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