Answered step by step
Verified Expert Solution
Question
1 Approved Answer
I'm tripping up on this one, can I plz get some help? A retail store in Hanes Mall in Winston-Salem purchases computer software from a
I'm tripping up on this one, can I plz get some help?
A retail store in Hanes Mall in Winston-Salem purchases computer software from a distributor for resale. For an upcoming promotion, the retailer needs to determine the best order size for a one-time purchase. One of the products is a word processing program that will have a special sale price of $350. The retailer estimates the following demand schedule: A. The program can be purchased from a distributor for $250 each, but there is a restocking charge of 20% of the purchase price for the return to the distributor of any unsold programs, that is, the distributor would only refund $200 to the retail store for any returned program. As such, the retailer makes a loss of $50 on every unsold program. (80 points) i) What should be the optimal order size for the retailer? ii) What will be the expected optimal profit for the retailer? B. Consider the following change made by the distributor. In order to reduce its risk, the distributor would refund $200 back to the store for only 80% of the returned items. For the remaining 20% of the returned items, the restocking charge is 40%, that is, the distributor would only return $150 to the store. Re solve the question to find the new optimal order quantity for the retailer and the new expected optimal profit. (20 points). A retail store in Hanes Mall in Winston-Salem purchases computer software from a distributor for resale. For an upcoming promotion, the retailer needs to determine the best order size for a one-time purchase. One of the products is a word processing program that will have a special sale price of $350. The retailer estimates the following demand schedule: A. The program can be purchased from a distributor for $250 each, but there is a restocking charge of 20% of the purchase price for the return to the distributor of any unsold programs, that is, the distributor would only refund $200 to the retail store for any returned program. As such, the retailer makes a loss of $50 on every unsold program. (80 points) i) What should be the optimal order size for the retailer? ii) What will be the expected optimal profit for the retailer? B. Consider the following change made by the distributor. In order to reduce its risk, the distributor would refund $200 back to the store for only 80% of the returned items. For the remaining 20% of the returned items, the restocking charge is 40%, that is, the distributor would only return $150 to the store. Re solve the question to find the new optimal order quantity for the retailer and the new expected optimal profit. (20 points)Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started