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Redbox and several movie studios have decided to sign a revenue - sharing contract for DVDs . Each DVD costs the studio $ 5 to
Redbox and several movie studios have decided to sign a revenuesharing contract for DVDsEach DVD costs the studio $ to produce. The DVD will be sold to Redbox for $ Redbox, inturn, prices a DVD at $ At this selling price, demand is assumed to be normally distributed,with a mean of and a standard deviation of Any unsold DVDs are discounted to $and all sell at this price. Redbox will share of the revenue with the studio, keeping foritself.
a How many DVDs should Redbox order?
b How many DVDs does Redbox expect to sell at a discount?
c What is the profit that Redbox expects to make?
d What is the profit that the movie studio expects to make
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