Newsvendor model with normally distributed demand

Inputs are in red, outputs in black

Mean demand, :
Standard deviation of demand, :

200
125

Optimal Order Quantity

Overage penalty, Co :

12

Order quantity, Q :

Underage penalty, Cu :

35

Standard Normal order quantity, z :

Critical ratio: Cu / (Co + Cu)

z
Q

Performance Measures

0.7447
#VALUE! 0.6579037
#VALUE! 282.23797

Order quantity to achieve a target in-stock probability

Target in-stock
0.9500

Expected Lost Sales, L(Q) :

Expected Sales, S(Q) :
Expected Left Over Inventory, V(Q) :
Fill rate, f :
Stockout probability:

#VALUE!

Overage penalty, Co :

#VALUE!

Underage penalty, Cu :

Order Quantity to achieve a target fill rate

Target fill rate
99%
Target lost sales
0.016
z
#VALUE!
Q
#VALUE!

Expected profit
Maximum profit
Mismatch cost

Purchase Price
Cost
Salvage Value
17875

11000

275

6875

5912

0.60

5088

#VALUE!
#VALUE!
#VALUE!
#VALUE!
27.43%
12
35
#VALUE!
7000.00
#VALUE!

18.8375
#VALUE! #VALUE!
#VALUE! #VALUE!
#VALUE!

100
65 Cost
53

100
55
0

Newsvendor model with normally distributed demand

Inputs are in red, outputs in black
Mean demand, :
Standard deviation of demand, :

200
125

Optimal Order Quantity

Overage penalty, Co :

55

Order quantity, Q :

Underage penalty, Cu :

45

Standard Normal order quantity, z :

Critical ratio: Cu / (Co + Cu)

z
Q

Performance Measures

0.4500
#VALUE! -0.1256613
#VALUE! 184.29233

Order quantity to achieve a target in-stock probability

Target in-stock
0.9500

Expected Lost Sales, L(Q) :

Expected Sales, S(Q) :
Expected Left Over Inventory, V(Q) :
Fill rate, f :
Stockout probability:

#VALUE!

Overage penalty, Co :

#VALUE!

Underage penalty, Cu :

Order Quantity to achieve a target fill rate

Target fill rate
99%
Target lost sales
0.016
z
#VALUE!
Q
#VALUE!

Expected profit
Maximum profit
Mismatch cost

Purchase Price
Cost
Salvage Value

184
-0.13
#VALUE!
#VALUE!
#VALUE!
#VALUE!
55.17%
55
45
#VALUE!
9000.00
#VALUE!

58.4125 18.8375
#VALUE! #VALUE!
#VALUE! #VALUE!
#VALUE!

100
55 Cost
0

100
55
0

Newsvendor model with Poisson distributed demand

Inputs are in red, outputs in black
Mean demand, :

Optimal Order Quantity

Overage penalty, Co :

0.05

Order quantity, Q :

Underage penalty, Cu :

0.35

Expected Lost Sales, L(Q) :

Critical ratio: Cu / (Co + Cu)

Q

Performance Measures

0.8750
#VALUE!

Order quantity to achieve a target in-stock probability

Target in-stock
0.9500
Q

#VALUE!

Order Quantity to achieve a target fill rate

Target fill rate
99%
Target lost sales
0.09
Q
#VALUE!

Expected Sales, S(Q) :

Expected Left Over Inventory, V(Q) :
Fill rate, f :
Stockout probability:
Overage penalty, Co :
Underage penalty, Cu :
Expected profit
Maximum profit
Mismatch cost

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)
Phi(z )

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

loss_normal(q , mu , sigma )
loss_poisson(s, mu )

Return expected lost sales with a normal distribution

Return expected lost sales with a Poisson distribution

find_z(target)
find_s_poisson(mu, target)

Return the z in the Standard Normal Distribution Function Table such that Phi(z) = tar
Return the S in the Poisson Distribution Function Table such that F(S) = target. Uses

find_lz(target):
find_s_loss_poisson(mu , target )

Return the z in the Standard Normal Loss Function Table such that LZ(z) = target. Us
Return the S in the Poisson Loss Function Table such that L(S) = target. Uses the rou

opt_order_normal(mu , sigma, co, cu)

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

sales(mu, loss)
leftover(q , mu , loss )
profit(q , mu , loss , co , cu )
fillrate(mu , loss )
revenue(q , mu , loss , price , v )

Return expected sales

Return expected left over inventory
Return expected profit
Return expected fill rate
Return expected revenue

Notation:
q or s
mu
sigma
z
co
cu
v

either an order quantity (q) or an order up-to level (s)

mean of the distribution
standard deviation of the distribution
standard normal z-statistic
overage cost
underage cost
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.

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

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