A company uses the newsvendor model to manage its inventories and faces normally distributed demand with a coefficient of variation of 0.75. The company decides to order a quantity that exactly equals the mean of its demand forecast.
Which of the following is true regarding this company's performance measures?
a. There is a 0.50 probability that there is enough inventories to serve all demand.
b. The expected inventory equals 50% of the mean of the demand forecast.
c. The stockout probability is 25%.
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