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Newsvendor Model Calculator - Normal Distribution

Calculates the optimal inventory level for uncertain demand for a perishable product.

The demand follows a normal distribution with a mean of Dmean and standard deviation of Dsd.


Formula: dMean+dSd*normsinv((fcPrice-fcCost)/fcPrice)

Q: The optimal inventory level.
price: The retail price.
cost: The purchase price.
Dmean: The mean of the demand.
Dsd: The standard deviation of the demand.


For a retail price of $7, a cost of $5 where the demand follows a normal distribution with a mean demand of 50 and a standard deviation of 20, calculate the optimal inventory.

Value Key Display Description
20 Dsd 20.00 Stores the standard deviation of the demand.
50 Dmean 50.00 Stores the mean of the demand.
5 cost 5.00 Stores the purchase price.
7 price 7.00 Stores the retail price.
  Q 38.68 Calculates the optimal inventory level.


Also see:
Newsvendor Model for a Uniform Distribution Formula Calculator
Newsvendor Model for a Lognormal Distribution Formula Calculator

Reference: Newsvendor Model - Wikipedia