Use the newsvendor model and all the assumptions that go with it to answer this. A flower girl who sells roses tells you that her selling price is 100 rupees per rose. One day you see the flower girl coming with a fresh set of roses she bought and ask her how much she paid for it. She says she will not tell you the cost price per rose but tells you that the demand is exponentially distributed with average demand of 20 roses across 2 days (and she also buys once in 2 days a set of 20 roses). Then the cost price per rose is __________ rupees.
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The newsvendor (or newsboy or single-period[1] or salvageable) model is a mathematical model in operations management and applied economics used to determine optimal inventory levels. It is (typically) characterized by fixed prices and uncertain demand for a perishable product. If the inventory level is {\displaystyle q}, each unit of demand above {\displaystyle q} is lost in potential sales. This model is also known as the newsvendor problem or newsboy problem by analogy with the situation faced by a newspaper vendor who must decide how many copies of the day's paper to stock in the face of uncertain demand and knowing that unsold copies will be worthless at
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she spent 4000 rupees in this 2 days
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