Newsvendor Model with Defects

Posted on Wed 07 May 2014 in Core OM and supply chain • Tagged with newsvendor model, behavioral OM

How does a retailers order quantity change when his supplier sends products some of which are defective? To answer this question in a concrete context, consider the canonical newsvendor model - demand \(D\) is random and has cdf \(F\left( \cdot \right)\); cost per unit when the firm places orders is …

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