Question 4

a. Triathlon store sells T2 skis at a selling price of $650. The store buys skis from a supplier at a unit cost of $230. The skis not sold during the ski season are sold at $130 after the season is over. The season's demand for skis is estimated to be normally distributed with a mean of 36 and a standard deviation of 12. How many skis should the store order?

b. Discuss why a company may be motivated to use fewer but larger private warehouses in the distribution network. What may be the underlying economic reasons for this decision regarding the number and size of private warehouses?