A milk vendor incurs an overstocking cost of Rs. 2 per litre and a shortage cos

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A milk vendor incurs an overstocking cost of Rs. 2 per litre and a shortage cost of Rs. 0.5 per litre.
The demand is uniformly distributed between 1 litre and 6 litres. Using the Newsvendor Model, the
maximum quantity of milk in litre(s) the vendor should order is

Options:

A . 2

B . 6

C . 1

D . 3

Answer: Option A

-NA-

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