Question

In a newsvendor setting where the seller faces random demand, if two products have the same critical ratio, then their optimal ordering quantity (i.e., the Newsvendor ordering quantity) will be the same.

A. True
B. False

Answer 1

A. True

Step-by-step explanation:

Critical ratio determines the area covered by optimal ordering quantity. The non perishable goods have high critical ratio then perishable goods. Optimal order quantity can be determined by Economic order quantity.