Which of the following is the root cause for the newsvendor problem?
A) uncertainty in supply
B) uncertainty in demand
C) high cost per unit sale
D) high total production cost

Question

Quizplus · Accepted Answer

The newsvendor problem arises due to uncertainty in demand, as the seller has to decide on the quantity to stock without knowing exactly how many units will sell. The other options (A, C, and D) may affect the calculation of the optimal order quantity, but they are not the root cause of the problem.

Which of the Following Is the Root Cause for the Newsvendor