A producer makes a product at a constant cost of $60 per unit and sells to a retailer at a wholesale price of $70, offering a buyback price (B). The retailer sells the product at $100 per unit, and each unsold unit is sold back to the producer at the buyback price (B), retaining a salvage value of $50. Demand for the product is random, following a normal distribution with a mean of 3000 and a standard deviation of 300. What value of the buyback price (B) will coordinate the supply chain?
A producer makes a product at a constant cost of $60 per unit and sells to a retailer at a wholesale price of $70, offering a buyback price (B). The retailer sells the product at $100 per unit, and each unsold unit is sold back to the producer at the buyback price (B), retaining a salvage value of $50. Demand for the product is random, following a normal distribution with a mean of 3000 and a standard deviation of 300. What value of the buyback price (B) will coordinate the supply chain?
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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![A producer makes a product at a constant cost of $60 per unit and sells to a
retailer at a wholesale price of $70, offering a buyback price (B). The retailer sells
the product at $100 per unit, and each unsold unit is sold back to the producer at
the buyback price (B), retaining a salvage value of $50. Demand for the product
is random, following a normal distribution with a mean of 3000 and a standard
deviation of 300. What value of the buyback price (B) will coordinate the supply
chain?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1b815388-426e-431e-83e9-76e412c4fca2%2F8edb1312-d2d1-455f-9144-35ebeb11e202%2Fxhdn459_processed.png&w=3840&q=75)
Transcribed Image Text:A producer makes a product at a constant cost of $60 per unit and sells to a
retailer at a wholesale price of $70, offering a buyback price (B). The retailer sells
the product at $100 per unit, and each unsold unit is sold back to the producer at
the buyback price (B), retaining a salvage value of $50. Demand for the product
is random, following a normal distribution with a mean of 3000 and a standard
deviation of 300. What value of the buyback price (B) will coordinate the supply
chain?
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