Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Great Bows ( GB ) is a manufacturer of high - end bows and sells their bows through Downtown Sporting Goods ( DSG ) retail

Great Bows(GB) is a manufacturer of high-end bows and sells their bows through Downtown Sporting Goods(DSG) retail store. Their top-selling bow is called Sterling. Demand for Sterling is assumed to follow a Normal distribution with a mean of 100 and standard deviation of 35. DSG sells the Sterling for $700, during the hunting season. Once the hunting season is over DSG sells the unsold Sterlings to a discount sporting goods store for $300. GBs unit manufacturing cost is $200. GB is considering charging DSG either $400, or $450, or $500 or $550per unit.
a) What unit price should GB charge to maximize its expected profit and how many units would DSG order at this price? (Please round up all order sizes). Hint: Think how many units DSG will buy at each price.
b) If GB charges the price you came up with in part (a) above and DSG adopts a service level of 0.90
i) What is DSGs optimal order size?
ii) What is DSGs implied Goodwill cost?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Experiencing MIS

Authors: David Kroenke

2nd Edition

0136078680, 9780136078685

More Books

Students also viewed these General Management questions