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

This article develops a new index "Achievable Capacity Index," I_A, which can accurately measure the profitability of newsboy-type product with normally distributed demand. An unbiased and effective estimator of I_A is derived to estimate actual I_A 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 I_A 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.