Geoff Gullo owns a small firm that manufactures Gullo Sunglasses. He has the opportunity to sell a particular seasonal model to Lands Start, a catalog retailer. Geoff offers Lands Start two purchasing options. Use Table 13.4.

Option 1: Geoff offers to set his price at $65 and agrees to credit Lands Start $52 for each unit Lands Start returns to Geoff at the end of the season (because those units did not sell). Because styles change each year, there is essentially no value in the returned merchandise.

Option 2: Geoff offers a price of $55 for each unit, but returns are no longer accepted. In this case, Lands Start throws out unsold units at the end of the season.

This seasons demand for this model will be normally distributed with a mean of 200 and a standard deviation of 100. Lands Start will sell those sunglasses for $95 each. Geoffs unit production cost is $25.

Note: If a part of the question specifies whether to use Table 13.4, or to use Excel, then credit for a correct answer will depend on using the specified method.

a.) How much would Lands Start buy if it chose option 1? Use Table 13.4 and round-up rule.

b.)How much would Lands Start buy if it chose option 2? Use Table 13.4 and round-up rule

c.) Use Table 13.4. Which option will Lands Start choose? Complete the table below:

Expected Inventory for Option 1: //// Expected Inventory for option 2

Expected sales for option 1: Expected sales for option 2

Expected profit for option 1: Expected profit for option 2

d.) Suppose Lands Start chooses option 1 and orders 250 units. What is Geoff Gullos expected profit? Use Table 13.4 and the round-up rule.