Calculate order quantity that maximizes its expected profit, Operation Management

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Calculate order quantity that maximizes its expected profit

Problem

FANatic's demand for its "Death Star" coffee mug during the Fall season is Poisson distributed with a mean of 5. FANatic calculates the order quantity that maximizes it's expected profit using the newsvendor model and determines that the stock-out probability with that order quantity is about 0.0054. What is that order quantity?

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Operation Management: Calculate order quantity that maximizes its expected profit

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Operation Management: Calculate order quantity that maximizes its expected profit

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