Consider two products whose demands are independent of each other. Assume that their demands are Normally...

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General Management

Consider two products whose demands are independent of eachother. Assume that their demands are Normally distributed and theyhave identical cost structures. Assume we use the newsvendor modelcovered in the class, which gives you a framework for how one makesinventory decisions under demand uncertainty. If we combine thedemands of the two products (i.e. Pool the demands) will the totalinventory decrease or increase as compared to making decisionsseparately for the two products. Show your arguments carefully.

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If we consider two products whose demands are independent of each other then one of the two products can be complementary good of another good or substitute of another good Complementary good is a good whose demand increases with the popularity of its Complement good See Answer

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