(9 points) Docs supplier is also considering offering him a buyback contract with the same wholesale price.

(3 points) What is the optimal buyback amount (i.e., b)?

Response: the optimal payback amount is $ _________

Detailed calculations

(3 points) What is Docs expected profit with the buyback contract?

Response: the expected profit is $ _________ profit

Detailed calculations

(3 point) What is the suppliers expected profit with the buyback contract?

Response: the expected profit for the supplier is $ _________

Detailed calculations