2. The USC Bookstore is preparing for the upcoming semester and needs to stock textbooks for Operations Management. The cost to acquire each textbook from the publisher is $75 and can be sold to students for $100. Any excess books are used as rentals for several years and have a lifetime value of $20. If a student requests an Ops textbook and the bookstore is out of stock, they offer the student a \$25 Amazon Gift Card so they can purchase it online through Amazon. Based on data from past semesters, the bookstore estimates there is a 5% chance they will sell 600 textbooks, a 10% chance they will sell 500, a 45% chance they will sell 400 and a 40% chance they will sell 300. You can assume they will sell exactly 600 , 500,400 , or 300 textbooks. a) (2 points) What is the expected demand for Ops books? 380 books b) (4 points) The manager of the bookstore (who hasn't taken BUAD 311) is adamant about ensuring that the bookstore customers are satisfied most of the time, so wants the bookstore to be in-stock 90% of the time. How many books should the bookstore stock to meet this manager's requirements? 500 books c) (5 points) One of the bookstore stockers (who stocks the shelves) has taken BUAD 311 and mentions that the bookstore is not stocking the most cost-effective quantity of Ops textbooks. What is the optimal order size for the USC Bookstore? 400 books d) (6 points) For this question only, ignore your previous answers and assume that the bookstore decides to order 400 books (this may or may not match your answer from above). With this new order size, what is the expected profit for the bookstore, including from potential textbook rentals or losses from being out of stock? $6,300