In this assignment, we will be exploring issues that arise when supply chains involve multiple stages, and the benefits of coordinating decisions across stages.

Specifically, we will consider a business model for baked goods that is common in large cities such as New York. Coffee shops want to make baked goods available to their clients, but don't want to go through the trouble of baking them themselves (this would require expensive investment in a full kitchen). Instead, they order these baked goods from a large bakery, which then delivers them every morning.

This is a perfect example of a supply chain that involves multiple stages and multiple actors. The two stages here are as follows:

• The first stage of the supply chain is the large bakery, which makes the baked goods. We assume that the bakery's operations are so large compared to those of our coffee store that they'll be able to deliver any number of baked goods the coffee shop orders. Thus, the only decision the bakery has to make is how much to charge the coffee shop per baked good.
• The second stage is the coffee store which, given the price set by the large bakery, has to decide how many to order for its customers.

We will consider one specific item procured by the coffee shop - a particularly popular almond croissant. The croissants cost$0.25each to produce, and retail for$4.00each. Demand for the croissants at the coffee shop is normally distributed with mean100 per day and standard deviation20. At the end of each day, any leftover croissants have to be given away to customers for free. The coffee shop has to place orders well in advance - once the day has stared, it can no longer order new croissants.

Question 1 1 point possible [graded] To start, suppose the large bakery decides to charge the coffee shop $2.00 per croissant. Which model should the coffee shop use to decide how many orders to place? O A continuous review inventory model {such as an (s, S} policy} 0 A periodic review inventory model {such as a [T, S} policy} 0 The nevvsvendor model 0 None of the above Question 2 1 point possible (graded) How many croissants should the coffee shop order every day? O 50 O 75 O 100 O 125Question 3 1 point possible [graded] Assuming the coffee shop orders this number, what will the bakery's revenue be, per day? 0 $100 O $200 C) $250 0 $300 Question 4 1 point possible (graded) Assuming the coffee shop orders this number, what will the bakery's profit be, per day? O $150 O $175 O $200 O $300