loss of good will

The classical newsvendor model under normal demand with large coecients of variation.MPRA Paper 40414, University Library of Munich, Germany.

In the classical newsvendor model, when demand is represented by the normal distribution singly truncated at point zero, the standard optimality condition does not hold. Particularly, we show that the probability not to have stock-out during the period is always greater than the critical fractile which depends upon the overage and the underage costs. For this probability we derive the range of its values.