A retailer is trying to decide between two suppliers to purchase 100 units a product. Supplier 1 offers a price of $25 per product but has a buy back guarantee for any unsold items at a price of $10 per item. Supplier two has a cheaper price of $22 per item but offers only $5 as the buyback price. Suppose that the retailer estimates the demand for the item to follow the cumulative distribution function below. (0, 0.4, if 60 < a < 80 0.6, if 80 100
A retailer is trying to decide between two suppliers to purchase 100 units a product. Supplier 1 offers a price of $25 per product but has a buy back guarantee for any unsold items at a price of $10 per item. Supplier two has a cheaper price of $22 per item but offers only $5 as the buyback price. Suppose that the retailer estimates the demand for the item to follow the cumulative distribution function below. (0, 0.4, if 60 < a < 80 0.6, if 80 100
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
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Please ONLY use this formula sheet. PLEASE make sure to write which formula you used to resolve each step of the problem please. Write by hand please.
Transcribed Image Text:A retailer is trying to decide between two suppliers to purchase 100 units a product. Supplier 1
offers a price of $25 per product but has a buy back guarantee for any unsold items at a
price of $10 per item. Supplier two has a cheaper price of $22 per item but offers only
$5 as the buyback price. Suppose that the retailer estimates the demand for the item to follow the
cumulative distribution function below.
0,
if a < 60
0.4, if 60 < x < 80
F(x) =
0.6, if 80 < x < 100
1,
if a > 100
(a) Write the net cost of purchasing the product after the buyback as a function of demand X for
each supplier.
(b) If the retailer's objective is to minimize the expected net cost, which supplier should they choose?
What would be the resulting cost?
(c) For the sunplier vou chose in part (b), compute the probability that the total cost does not exceed
$2100.
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