Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

3. (10 marks) ABC toy store in Ottawa has two toy suppliers, one in Montreal and one in Toronto. The two suppliers supply the same

image text in transcribed
3. (10 marks) ABC toy store in Ottawa has two toy suppliers, one in Montreal and one in Toronto. The two suppliers supply the same type of toys. The Montreal supplier supplies 00% of the toy store's total toys and the Toronto supplier supplies 40%. All toys {tour the two suppliers are sent to regional warehouses, where they are intermingled. After extensive study, the quality assurance manager has determined that 95% of the toys supplied by Montreal supplier and 90% of the toys supplied by Toronto supplier are good based on customer satisfaction. To encourage the two suppliers to produce better toys1 when the toy store sells a good quality toy at a particular time, the manager of the toy store would like to offer $100 to the two suppliers as a reward. The manager of the toy store would like to distribute the reward $100I fail-13.r between the two suppliers. Two students A and B in ECON 2210 class suggested the following two methods: Student A: Distribute $60 and $40 of the rewards $100 to the two suppliersT respectively, since they supply 60% and 40% of the total toys, respectively. Student B: Distribute 0321330 percent and % percent of the reward to the two suppliers, respectively, since the good quality rates of the toys supplied by the two suppliers are 95% and 90%, respectively. {a} (2 marks) "Which one of the two students do you agree with? Why or why not? (b) (3 marks) If you do not agree with any one of the tWo students. what are your suggestions? State your method clearly

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Entrepreneurship Successfully Launching New Ventures

Authors: Bruce R. Barringer, R. Duane Ireland

4th Edition

0132555522, 978-0132555524

More Books

Students also viewed these Economics questions