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Q. It is about the forecast sharing game. In the game there was a retailer and the supplier. The demand could be for 1, 2 or 3units. The retailer knew whether the demand type was high or low, but not the exact demand realization. For a high type demand the probability of demand for 3 units was 65%, the probability of demand for 2 units was 33% and the probability of demand for 1 unit was 2%. For a low type demand the probability of demand for 3 units was 2%, the probability of demand for 2 units was 33% and the probability of demand for 1 unit was 65%. In the game we played in class, the retail price was 3, the wholesale price was 2 and the production cost was 1. According to the equilibrium analysis of a single shot game If

Q. It is about the forecast sharing game. In the game there was a retailer and the supplier. The demand could be for 1, 2 or 3units. The retailer knew whether the demand type was high or low, but not the exact demand realization. For a high type demand the probability of demand for 3 units was 65%, the probability of demand for 2 units was 33% and the probability of demand for 1 unit was 2%. For a low type demand the probability of demand for 3 units was 2%, the probability of demand for 2 units was 33% and the probability of demand for 1 unit was 65%. In the game we played in class, the retail price was 3, the wholesale price was 2 and the production cost was 1. According to the equilibrium analysis of a single shot game If

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Q. It is about the forecast sharing game. In the game there was a retailer and the supplier. The demand could be for 1, 2 or 3units. The retailer knew whether the demand type was high or low, but not the exact demand realization. For a high type demand the probability of demand for 3 units was 65%, the probability of demand for 2 units was 33% and the probability of demand for 1 unit was 2%. For a low type demand the probability of demand for 3 units was 2%, the probability of demand for 2 units was 33% and the probability of demand for 1 unit was 65%. In the game we played in class, the retail price was 3, the wholesale price was 2 and the production cost was 1. According to the equilibrium analysis of a single shot game. If the retailer knows the demand type is high, she should tell the supplier that the demand type is . If the retailer knows the demand type is low, she should tell the supplier that the demand type is If the supplier gets a forecast from the retailer that the demand type is high, she should units. If the supplier gets a forecast from the retailer that the demand type is produce ---_units. Since the number of units sold(sales) are the minimum of production and demand, on average, sales are Lunits( use 3 decimals). (question is based on Purchasing, sourcing and contract management) low, he should produce
Transcribed Image Text:Q. It is about the forecast sharing game. In the game there was a retailer and the supplier. The demand could be for 1, 2 or 3units. The retailer knew whether the demand type was high or low, but not the exact demand realization. For a high type demand the probability of demand for 3 units was 65%, the probability of demand for 2 units was 33% and the probability of demand for 1 unit was 2%. For a low type demand the probability of demand for 3 units was 2%, the probability of demand for 2 units was 33% and the probability of demand for 1 unit was 65%. In the game we played in class, the retail price was 3, the wholesale price was 2 and the production cost was 1. According to the equilibrium analysis of a single shot game. If the retailer knows the demand type is high, she should tell the supplier that the demand type is . If the retailer knows the demand type is low, she should tell the supplier that the demand type is If the supplier gets a forecast from the retailer that the demand type is high, she should units. If the supplier gets a forecast from the retailer that the demand type is produce ---_units. Since the number of units sold(sales) are the minimum of production and demand, on average, sales are Lunits( use 3 decimals). (question is based on Purchasing, sourcing and contract management) low, he should produce
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