<p>We develop a newsvendor model in which the holding costs are calculated based on the actual inventory level along the selling period rather than the inventory level at the end of this period. By modifying the cost parameters in the standard newsvendor solution, we provide upper and lower bounds on the optimal order quantity, and use their average as a heuristic solution. In addition, we propose two approximation formulae that are derived by modifying the demand distribution over the entire selling period. Finally, we provide a real-life example of the application of our model and we conduct a numerical analysis with a non-homogeneous Poisson demand distribution to evaluate the accuracy levels of the bounds and approximation formulae. The managerial implications are: (i) It may be important to estimate the demand distribution up to any timepoint sufficient to accrue holding costs according to the actual accounting scheme. (ii) A lower and an upper bound on the optimal order quantity can be easily calculated. (iii) Using the average of the lower and upper bounds is recommended as a heuristic solution. (iv) When the maximal potential profit deviation is considerable, we recommend using the two-moment normal approximation.</p>