Revenue Sharing Contract

Input	No-Sharing	Revenue Sharing
Expected demand (MD)	4000	4000
Standard Deviation of Demand (sigma)	800	800
Manufacturing cost (v)	20	20
Revenue Sharing Percentage (f)	0%	30%
Retail price (p)	200	200
Item Cost (c)	100	40
Salvage value (s)	10	10
Retailer's Expected Profit	$ 339,480
Manufacturer's Expected Profit	$ 324,480
Total Supply Chain Profit	$ 663,960

a. What is the underage cost under the revenue sharing contract?

a. 80 b. 100 c. 120 d. 140

b. What it the cycle service level under this contract?

a. 0.5263 b. 0.6832 c. 0.7692 d. 0.8333

c. What is the optimal order quantity under this contract?

a. 4296 b. 4370 c. 4444 d. 4592

d. What are the expected sales of this contract?

a. 3947 b. 3933 c. 3920 d. 3893

e. What is the retailers expected profit of this contract?

a. $384,230 b. $380,190 c. $376,280 d. $368,330