Newsboy Problem
The newsboy problem is a classic optimization problem in which a boy is deciding how many copies of neighborhood newsletter to print every week when facing uncertainty in weekly demand. The mechanisms of this problem is very intuitive, but the challenge lies within the uncertain demand. On the one hand, if the boy prints too much newsletter for a given week, the extra would have to be discarded. On the other hand, if too few is printed, he will ends up with some disgruntle “customers” (neighbors).
We can approach this problem with analytical angle trading-off between extra and shortage. Alternatively, we can use empirical data to simulate what happens for each of the 52 weeks of a year.
We do so in 4 steps.