Question
(A retail store wants to decide on how many copies of a DVD player to purchase at the start of the upcoming selling season. The
(A retail store wants to decide on how many copies of a DVD player to purchase at the start of the upcoming selling season. The DVD player selling price is $17. The supplier sells the DVD player to the retail store for $9. The retail store will recycle all of the unsold DVD players at 85 percent off the selling price. The retail stores demand forecasts show that the demand for the DVD player is normally distributed with a mean of 150 and a standard deviation of 55.)
(if need that info it is available I don't know if you need it too answer the bottom 3)
The supplier is thinking of offering a deal to the retail store: at the end of the selling season, the supplier will buy back unsold DVD players at the price of $6. However, the retail store will incur the shipping cost which is $2.5 per copy.
d) Under this buyback contract, how many DVD players should the retail store order to maximize its expected profit?
e) What is retail stores expected profit given its order quantity in part d?
f) Assume the supplier can on average earn $5 on each returned DVD player. Given the order quantity in part d, what is the suppliers expected profit?
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