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Quality Bike Products ( QBP ) is a national distributor of bicycle products ( bikes , service parts, and other accessories, some of which are

Quality Bike Products (QBP) is a national distributor of bicycle products (bikes, service parts, and other accessories, some of which are company-designed) for small, independent bike shops across the US. The final assembly suppliers for several of their company-designed line of bicycles are mainly located in Taiwan. These bicycle suppliers have an average lead-time of about 4 months between the time an order is placed by QBP and the associated shipment is received at QBPs distribution center in Bloomington, MN. Because of this long lead-time, QBP positions most of its annual bicycle inventory in its distribution center in anticipation of the main selling season, which runs from April to September. As a result, most orders to these bicycle suppliers are placed in early January for delivery in April.
One of QBPs bicycle models for the upcoming season is known as the Surley-007. This will be the first offering of this new model. The wholesale price for the Surley-007(i.e., the price QBP charges bike shops) will be $750 per bicycle. Based on an analysis of prior sales history for like-skus, seasonal demand at this price point for the Surley-007 is estimated to be normally distributed with a mean of 10,000 and a standard deviation of 3,500. In terms of expenses, QBP must pay the supplier $200 per bicycle ordered as well as an additional $10 per bicycle for shipping (including customs duties, etc.). QBP also incurs a seasonal holding cost, which is accounted as 10% of QBPs purchased cost. For the Surley-007, this results in a holding cost of $200 x 10%= $20 per bicycle. QBP also pays its sales staff a 15% commission, computed again as a % of QBPs purchased cost, for each bicycle sold to a bike shop.
Short Answer: How many Surley-007 bicycles should QBP order to maximize its expected profit? Explain your reasoning (i.e., show the steps of your work).

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