The supplier's unit cost for the product is $10. The product is sold by the supplier to the retailer for $15 per unit. The retailer then sells the product to end consumers for $20 per unit. There is no value for unsold items. Demand for the product in the consumer market follows a Normal distribution with a mean of 3000 and a standard deviation of 1000. The retailer must determine the quantity to order before actual demand is known. a) What is the optimal order amount for the retailer? b) The supplier offers to buy any unsold product at $5. What is the buyer's optimal order quantity? c) What would be the best buyback offer for the supplier? find the optimal buyback price that the supplier should offer to the retailer so that one does not earn less than the wholesale price contract in part a. (d) What would be the optimal order quantity if both companies were owned by the same person?
The supplier's unit cost for the product is $10. The product is sold by the supplier to the retailer for $15 per unit. The retailer then sells the product to end consumers for $20 per unit. There is no value for unsold items. Demand for the product in the consumer market follows a
a) What is the optimal order amount for the retailer?
b) The supplier offers to buy any unsold product at $5. What is the buyer's optimal order quantity?
c) What would be the best buyback offer for the supplier? find the optimal buyback price that the supplier should offer to the retailer so that one does not earn less than the wholesale price contract in part a.
(d) What would be the optimal order quantity if both companies were owned by the same person?
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