Demand Modeling

We introduce the binomial distribution, which can be used to model uncertain customer demand when the number of customers and their likelihood of making a purchase are known.  In many problem settings, the store does not know the exact number of customers. In such cases, the Poisson distribution may be more appropriate for modelling customer demand. In particular, the Poisson distribution makes use of information regarding average sales to model customer demand. If demand variance is also be known, the normal distribution may be used.