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smallCart, an online retailer, estimates its daily demand follows a Normal distribution with a mean of 2 0 0 0 orders and standard deviation 4

smallCart, an online retailer, estimates its daily demand follows a Normal distribution with
a mean of 2000 orders and standard deviation 400 orders. smallCart uses a 3PL partner
for deliveries and needs to specify the capacity (in terms of number of orders to deliver per
day) as part the contract. For deliveries up to the contracted capacity, the 3PL charges $ 10
per delivery and gets paid for the entire regular capacity irrespective of whether it is used or
not. The 3PL can also make additional (surge) delivery capacity if needed by smallCart and
charges a price of $ 15 for each delivery made using the surge capacity. smallCart estimates
the current margin earned per order to be $ 22. How much regular transportation capacity
should smallCart contract with the 3PL (rounded up to the closest multiple of 10)?
A.1780.
B.1830.
C.1910.
D.2100.
3. A manufacturer of white goods relies on a large chain of independently owned departmental
stores to sell its washing machines because the retailers salespeople greatly influence consumer
decisions. It is well known that the salesforce at the departmental stores will push products that
provide sufficient sales commission or encourage shoppers to buy the retailers own private-label
products. Unfortunately, the manufacturer cannot observe the sales effort of the salespeople.
Even though the manufacturers product is not significantly different from its competitors in
most respects (including price), average sales have been dipping. Further, the swing in sales
across months, compared to that of competitors selling through the same retail chain, has been

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