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In: Operations Management

Consider product A and product B who have independent demands from one another. Now assume that...

Consider product A and product B who have independent demands from one another. Now assume that both demands are normally distributed with same cost structure. Using the newsvendor model (how to make inventory decisions under uncertainty of demand) - if the demand is combined or pooled for products A and B, will the TOTAL inventory increase or decrease vs. making separate decisions for the two products? Show work and arguments very carefully. (25 marks / 100)

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keosha answered 6 months ago
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