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P2: Revenue Sharing A newsboy orders newspaper from the company to print one copy is 20 cents. Currently, the newsboy orders from the newspaper company
P2: Revenue Sharing A newsboy orders newspaper from the company to print one copy is 20 cents. Currently, the newsboy orders from the newspaper company for the newspaper at 50 cents per copy. The newsboy then sells the newspapers to end-customers at S1 per copy. There is no salvage value for any unsold newspaper. The potential end-customer demand every day follows the table below, depending on the weather newspaper company. The cost for the newspaper WeatherPossible Probability demand D P(D) Snowy150 Rainy Cloud Sunny 250 350 450 25% 25% 30% 20% a) What are the unit underage cost (Cu) and the overage cost (Co) for the newsboy? b) How many copies per day should the newsboy buy? c Suppose the newsboy and the newspaper company belong to the same company (a centralized firm). What are the unit underage cost (Cu) and the overage cost (Co) for the whole company? How many copies should the company print every day d) Disregard c). Suppose the newspaper company now offers a revenue sharing contract with the newsboy. The newsboy pays 10 cents per copy to the newspaper company up front (which is much lower than original purchasing cost 50 cents). However, for each copy of the newspaper sold to the end-consumers, the newsboy needs to give 50 cents (of that $1) to the newspaper company. What are the unit underage cost (Cu) and the overage cost (Co) for the newsboy? How many copies should the newsboy buy from the newspaper company every day
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