Newsvendor model with normally distributed demand

Inputs are in red, outputs in black

Mean demand, m : 200
Standard deviation of demand, s : 24

Optimal Order Quantity Performance Measures

Overage penalty, Co : 0.05 Order quantity, Q :
Underage penalty, Cu : 0.35 Standard Normal order quantity, z :
Critical ratio: Cu / (Co + Cu) 0.8750 Expected Lost Sales, L(Q) :
z #VALUE! Expected Sales, S(Q) :
Q #VALUE! Expected Left Over Inventory, V(Q) :
Fill rate, f :
Order quantity to achieve a target in-stock probability Stockout probability:
Target in-stock 0.9500
z #VALUE! Overage penalty, Co :
Q #VALUE! Underage penalty, Cu :
Expected profit
Order Quantity to achieve a target fill rate Maximum profit
Target fill rate 99% Mismatch cost
Target lost sales 0.0833
z #VALUE!
Q #VALUE!
 280
3.33
#VALUE!
#VALUE!
#VALUE!
#VALUE!
0.04%

0.05
0.35
#VALUE!
70.00
#VALUE!
Newsvendor model with Poisson distributed demand
Inputs are in red, outputs in black
Mean demand, m : 9

Optimal Order Quantity Performance Measures

Overage penalty, Co : 0.05 Order quantity, Q :
Underage penalty, Cu : 0.35 Expected Lost Sales, L(Q) :
Critical ratio: Cu / (Co + Cu) 0.8750 Expected Sales, S(Q) :
Q #VALUE! Expected Left Over Inventory, V(Q) :
Fill rate, f :
Order quantity to achieve a target in-stock probability Stockout probability:
Target in-stock 0.9500
Q #VALUE! Overage penalty, Co :
Underage penalty, Cu :
Order Quantity to achieve a target fill rate Expected profit
Target fill rate 99% Maximum profit
Target lost sales 0.09 Mismatch cost
Q #VALUE!
 8
#VALUE!
#VALUE!
#VALUE!
#VALUE!
45.57%

0.05
0.35
#VALUE!
3.15
#VALUE!
Functions for evaluating the newsvendor and order up-to models

lz(z) Return the standard normal loss function for the z-statistic z. Returns 4 significant dig
Phi(z ) Return Prob(D<=z), where D is a standard normal. Returns 4 significant digits.

loss_normal(q , mu , sigma ) Return expected lost sales with a normal distribution

loss_poisson(s, mu ) Return expected lost sales with a Poisson distribution

find_z(target) Return the z in the Standard Normal Distribution Function Table such that Phi(z) = ta
find_s_poisson(mu, target) Return the S in the Poisson Distribution Function Table such that F(S) = target. Uses

find_lz(target): Return the z in the Standard Normal Loss Function Table such that LZ(z) = target. Us
find_s_loss_poisson(mu , target ) Return the S in the Poisson Loss Function Table such that L(S) = target. Uses the ro

opt_order_normal(mu , sigma, co, cu) Return the quantity, Q, such that F(Q) = critical ratio = cu / (co+cu).

sales(mu, loss) Return expected sales

leftover(q , mu , loss ) Return expected left over inventory
profit(q , mu , loss , co , cu ) Return expected profit
fillrate(mu , loss ) Return expected fill rate
revenue(q , mu , loss , price , v ) Return expected revenue

Notation:
q or s either an order quantity (q) or an order up-to level (s)
mu mean of the distribution
sigma standard deviation of the distribution
z standard normal z-statistic
co overage cost
cu underage cost
v salvage value
stic z. Returns 4 significant digits.
urns 4 significant digits.

on Table such that Phi(z) = target. Uses the round up rule.

such that F(S) = target. Uses the round-up rule.

ble such that LZ(z) = target. Uses the round up rule.

hat L(S) = target. Uses the round-up rule.