Calculates the optimal inventory level for uncertain demand for a perishable product.

The demand follows a lognormal distribution with a mean of Dmean and standard deviation of Dsd.

Formula: dMean*exp(dSd*normsinv((fcPrice-fcCost)/fcPrice))

Q: The optimal inventory level.

price: The retail price.

cost: The purchase price.

Dmean: The mean of the demand.

Dsd: The standard deviation of the demand.

For a retail price of $7, a cost of $5 where the demand follows a lognormal distribution with a mean demand of 50 and a standard deviation of 0.20, calculate the optimal inventory.

Value | Key | Display | Description |
---|---|---|---|

.2 | Dsd | 0.20 | Stores the standard deviation of the demand. |

50 | Dmean | 50.00 | Stores the mean of the demand. |

5 | cost | 5.00 | Stores the purchase price. |

7 | price | 7.00 | Stores the retail price. |

Q | 44.65 | Calculates the optimal inventory level. |

Also see:

Newsvendor Model for a Uniform Distribution Formula Calculator

Newsvendor Model for a Normal Distribution Formula Calculator

Reference: Newsvendor Model - Wikipedia