Scenario 2B: Middle-mans Order (1 customer) Suppose a lumber-yard (Nice Lumber) agrees to serve as a distributor for a builder. This means Nice Lumber will stock the FSC-certified lumber for one green builder. Nice Lumber will pay $4.00 per board foot for FSC-certified wood and sell it to the builder for $4.25 per board foot. If demand exceeds the inventory, the green builder will buy traditional wood from a different lumber yard to meet the demand at a price of $3.40 per board-foot. In addition to the lost sale, Nice assigns a cost of $2.00 per board foot of shortage of FSC lumber. If the inventory of FSC-certified lumber exceeds demand, Nice will immediately substitute the excess FSC certified lumber to meet demand from other customers and reduce its purchases of traditional lumber accordingly. Nice pays $3.40 per board foot for traditional lumber.

3. How many board-feet of FSC certified lumber should Nice Lumber purchase?