Question
NEED 6-9!!!! Tyson Co supplies frozen chicken wing to the local grocery chain Price Chopper. The variable cost for Tyson is $200/box. Tyson sells it
NEED 6-9!!!!
Tyson Co supplies frozen chicken wing to the local grocery chain Price Chopper. The variable cost for Tyson is $200/box. Tyson sells it to Price Chopper at the price of $400/box. The retail price at Price Chopper is $700/box. Two weeks before the expiration date, any unsold chicken wing will be sold to a discount channel at the price of $100/box. In the current sales season, the chicken-wing demand of Price Chopper can be 300, 350, 400, 450, 500 boxes, each with probability of 20%. You only need to consider the sales of the current season. There is only one chance to order for each season, therefore, this is a one shot decision.
- How many boxes of chicken wings should Price Chopper Order?
- In average, how many boxes will be sold through the discount channel?
- What is the expected profit for Price Chopper?
- If the supply chain is fully coordinated, what is the supply chain profit?
- Keeping the $400/box wholesale price, Tyson want to propose a (lowest cost) buyback contract to coordinate the supply chain. What should be the buyback price? Please round to integer dollar value.
- Please discuss the potential implementation issue of the buyback contract
- Please design an options contract that is equivalent to the buyback contract in (5)
- Price Chopper makes a proposal to Tyson suggesting Tyson to reduce the whole sale price to $300/box. In exchange, Price Chopper is willing to share 10% of their revenue. Should Tyson accept this offer, i.e., does Tyson make more money?
- What is the theoretically equivalent revenue sharing contract of the buyback contract in (5)? What is the problem with this contract? How to solve the problem?
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