If you’re in a situation where you need to purchases the perfect amount of supplies so you don’t buy too much and also don’t want to lose out on sales by having too few, how much do you buy? It’s called ‘the newsvendor problem’ in supply chain management and the formula can be quite complicated involving ‘salvage’ – what you can sell the surplus for. Mathematically, the equation ideally solves at zero. You buy exactly the amount you’re going to sell. You have no leftovers, and no one leaves disappointed.
But how do you know you didn’t miss out? Did anyone see you were sold out and didn’t express disappointment? What if you have just one leftover? Not ‘zero’, not ‘some’, just one. Forget about math, isn’t that the only amount that satisfies you emotionally that you didn’t miss out on sales? This is the difference between solving the equation and solving the emotion. Sometimes you can’t have both and it’s worth deciding which one is more important to you before you start.
Is that one a waste? If it’s stale-dated like food, sure and of course you could be positioned for scarcity. You can also end up with one slice of pizza and who takes the last slice? Different problems for a different day…
