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A supplier of seasonal products produces to stock and sells these products to a wholesaler. The wholesaler orders from the supplier a single order for

A supplier of seasonal products produces to stock and sells these products to a wholesaler. The wholesaler orders from the supplier a single order for delivery at the beginning of the season. This happens just after the wholesaler has observed its demand. The wholesale price is SAR 70 per product. At the end of the season, the supplier offers the remaining unsold products in the open market for SAR 5 per product. The supplier's financial department estimates the unit production cost at SAR 40 and the production setup cost at SAR 150,000. The wholesaler sells the products at SAR 129 per unit. The wholesaler yearly demand is normally distributed with a mean of 60.000 and standard deviation of 10,000. Use two decimals for all calculations. 


1. How many units should the supplier produce? 


2. Find the supplier's expected profile.


3. How many units does the supplier expect to sell in the open market? 


4. Find the expected profit of the wholesaler. 


To increase the market share, the wholesaler is investigating a proposal to pay the supplier SAR 15 for every unsold product on top of the open market price that the supplier is getting. 


5. Under this plan, how many products should the supplier produce? 


6. Find the expected profit of the supplier. 


7. How many units does the supplier expect to sell in the open market? 


8. Find the expected profit of the wholesaler. 


9. Should the supplier accept this proposal? Justify your answer.

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