What is the Newsvendor Model?

Imagine you are selling ice cream at a park on a hot day. You have to decide in the morning how many ice creams to bring. You want to sell as many as you can, but you also don't want to bring too many and have them melt before you can sell them.

The Newsvendor Model is a way to help you figure out how many ice creams to bring. It takes into account how much money you make when you sell an ice cream (the more you sell, the more money you make) and how much money you lose when you have ice creams that melt and you can't sell (the more unsold ice creams, the more money you lose).

This model helps you find a balance between bringing enough ice cream to make lots of money, but not so much that you have lots of melting ice creams. It's a bit like Goldilocks - you don't want too many or too few ice creams, you want the amount to be just right!