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Please walk me through this process (show work/reasoning). I have no idea where to start for this problem. Application of Wholesale-Price and Buy-Back Contracts at

Please walk me through this process (show work/reasoning). I have no idea where to start for this problem.

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Application of Wholesale-Price and Buy-Back Contracts at Wal-Mart A toy company produces "Go-Go-Bunny" for the upcoming Christmas season. The production cost of the toy is $15 for the toy company. It will sell the toy to Wal-Mart at a wholesale price of $40. Wal-Mart will sell the toy at a retail price of S80. If any unsold toys, Wal-Mart will ship them to China to sell in the Chinese New Year season, but at a discount price of S40. But this incurs an additional S30 shipping fee for each toy shipped to China. The demand of Wal-Mart is estimated to be Demand Probability 10,000 12,000 14,000 16,000 10% 30% 30% 30% Cumulative Probability 10% 40% 70% 100% a) overstocking costs? What is Wal-Mart's target service level? How many toys should Wal-Mart order for the season? Under the above wholesale-price contract, what are Wal-Mart's understocking and b CIf the channel were coordinated (i.e., centralized), what would the optimal target service level be? What would the optimal order quantity be? c) with a buy-back price S28. The toy company also sells unsold toys in the Chinese New Year season at a discount price of S40, by incurring a S30 shipping fee. What is Wal-Mart's target service level? How many toys should Wal-Mart order for the season? Does the buy-back contract coordinate the channel d) reduced to $30, and the Wal-Mart would give the toy company 10% of its revenue for all toys sold, what is Wal-Mart's target service level? How many toys should Wal-Mart order for the season? Keeping the $40 wholesale price, the toy company proposes a buy-back contract If both parties agree on a revenue-sharing contract, in which the wholesale price is

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