Order before demand is known
How do overstock and missed sales pull a decision in opposite directions?
Entering midway? Revisit Price a fictional pop-up shop for the preceding worked example, or start here and use the explanation below.
Start with a concrete question
A fictional stall buys items for 4 credits, sells them for 8, and recovers a selectable salvage value for leftovers. Choose a stock order, then test multiple demand scenarios.
Try the initial inputs, then write a prediction before changing one setting. All calculations run locally on your CPU.
What do you expect?
Predict whether ordering enough for the largest possible demand is always best.
Change one thing. Inspect what happens.
- Commit to 50 units and compare demands 20, 50 and 80 without changing the order.
- Compare orders 30 and 70 under the same three demand scenarios. Record profit and missed sales.
- Raise salvage to 4. Explain why excess stock stops losing purchase cost in this simplified model.
Your settingsMechanism
Calculation belowEvidence
Compare outcomes
Compare the current results
Every bar starts at zero and uses the same numeric scale in this chart. The upper bound automatically adjusts to the largest current value (at least 1), so compare the numbers when changing inputs. Units and quantities come from each label; different kinds of quantity are not interchangeable. Displayed values are rounded to at most six significant digits.Follow the calculation
- Order 50 units at 4 credits each: spend 200. Demand is 40.
- Sell min(50, 40) = 40 at 8 credits: receive 320.
- Leftover 10 units recover 1 each: 10.
- Profit = 320 + 10 − 200 = 130.
Excess stock loses purchase cost minus salvage; too little stock misses potential margin. Choose before revealing demand to practice decisions under uncertainty.
Captures keep your inputs, prediction and observation. Results are recalculated from those inputs. Resetting inputs keeps your captures and challenge history.
Explain the mechanism
Order before demand is known
A fictional stall buys items for 4 credits, sells them for 8, and recovers a selectable salvage value for leftovers. Choose a stock order, then test multiple demand scenarios.
Before you change anything
Predict whether ordering enough for the largest possible demand is always best.
Follow the mechanism
An order is chosen before uncertain demand is observed. Changing it after seeing demand would give an unfair advantage.
Ordering 50 and selling 40 earns 320 credits, recovers 10 from leftovers at salvage 1, and costs 200: profit 130.
Every unsold unit loses 4 minus its salvage value. Every unfilled sale misses a possible 4-credit margin; it is not a cash expense in the profit calculation.
Calculate it yourself
Sold = min(order, demand); profit = 8 × sold + salvage × (order − sold) − 4 × order.
Try a counterexample
Commit to 50 units and compare demands 20, 50 and 80 without changing the order.
Compare orders 30 and 70 under the same three demand scenarios. Record profit and missed sales.
Raise salvage to 4. Explain why excess stock stops losing purchase cost in this simplified model.
What this model leaves out
Scenario comparisons have no probabilities, so they do not calculate expected profit.
Storage, disposal, shortages affecting future loyalty and financing are omitted.
Take it further
High school: Choose stock for a fictional event and justify the risk you accept.
College: Assign demand probabilities and compare expected profits for every feasible order.
Working professionals: Build a replenishment recommendation with forecast error and explicit service-level costs.
Try a fresh case
A new stall orders 20 units at 4 credits, sells 15 at 8 and recovers 2 for each leftover. What is profit?
This is a public practice check. Retries support learning; matching a number does not certify independent proficiency.
Take the investigation further
Choose any extension. These are project prompts for you to carry out; they are not automatically assessed.
School investigation
Choose stock for a fictional event and justify the risk you accept.
College investigation
Assign demand probabilities and compare expected profits for every feasible order.
Workplace investigation
Build a replenishment recommendation with forecast error and explicit service-level costs.
Keep the evidence, choose your next step
Completion records your own decision that you have worked through this investigation. Practice checks and independent project evidence are separate.