Question
An American retailer buys the winter-coats for $40 each from a regional supplier and sells them for $140 each during the regular season. The demand
An American retailer buys the winter-coats for $40 each from a regional supplier and sells them for $140 each during the regular season. The demand for the winter-coats is forecasted with normally distribution of 200 on the average and the variability is expressed with 50 units. Any winter coat left unsold in the regular winter season, can be sold at a discount house for $80, but the retailer must pay for the transportation cost to the discount store with 50 cents per dollar invested originally. In the case that demand is more than the initial procurement from the regional supplier, a second procurement is possible. However, the supplier increases the price to $50 from the original $40 each. Find the unit understocking (Cu) and the unit overstocking (Co) costs for the American retailer. Show the mathematical algebra in achieving the correct final result to get credit
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