Final answer:
The newsy model is a mathematical model used in business and operations management to determine the optimal order quantity of a perishable product. It helps businesses determine the quantity to order to maximize profits.
Step-by-step explanation:
The news vendor model is a mathematical model used in business and operations management to determine the optimal order quantity of a perishable product. It is often used in industries such as newspapers, where there is a demand for a specific quantity of newspapers on a given day and any unsold newspapers cannot be sold on a later date.The model takes into account the cost of ordering newspapers, the cost of discarding unsold newspapers, and the revenue generated from selling newspapers. By considering these costs and revenue, the newsy model helps businesses determine the optimal quantity to order to maximize their profits.For example, let's say a newspaper vendor wants to determine how many newspapers to order for a particular day. They need to consider the cost of ordering the newspapers, the cost of discarding any unsold newspapers, and the revenue generated from selling the newspapers. Using the news vendor model, the vendor can calculate the optimal order quantity that will maximize their profits.