Demand Distribution - Newsvendor: One-Period Inventory, Step by Step

The one-period newsvendor model starts with a finite demand distribution.

highlighted = computed this step

Low demand

Demand 1 has probability 1/4.

P(D=1)=1/4

Demand 2 has probability 1/2.

P(D=2)=1/2

Demand 3 has probability 1/4.

P(D=3)=1/4

This is a pinned one-period distribution, not a forecast made by the lesson.

\text{finite pinned distribution}