Assessing profitability of a newsboy-type product with normally distributed demand based on multiple samples

Rung Hung Su, Dong Yuh Yang*, W.l. Pearn

*Corresponding author for this work

Research output: Contribution to journalArticle

Abstract

This article develops a new index "Achievable Capacity Index," IA, which can accurately measure the profitability of newsboy-type product with normally distributed demand. An unbiased and effective estimator of IA is derived to estimate actual IA as the parameters of distribution are unknown. Practically, the market information regarding demand is obtained from multiple samples rather than single sample. Therefore, we estimate and test IA based on multiple samples. A hypothesis testing for examining whether the profitability meets designated requirement is presented. Critical values of the test are calculated to determine the evaluation results. Finally, a real case on the sales of donuts is presented to illustrate the applicability of our approach.

Original languageEnglish
Pages (from-to)2701-2719
Number of pages19
JournalCommunications in Statistics - Theory and Methods
Volume42
Issue number18
DOIs
StatePublished - 17 Sep 2013

Keywords

  • Achievable capacity index
  • Estimating and testing
  • Multiple samples
  • Newsboy
  • Normal demand

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