Question
Suppose that Dr. Su really wants to get out of academia for more money but driving for Uber/Lyft may not be the best option. He
Suppose that Dr. Su really wants to get out of academia for more money but driving for Uber/Lyft may not be the best option. He decides to start a new wholesale business and now sells high-end specialized electronics to a retailer called Maverick Corp. Maverick purchases each unit from Dr. Su for $75 and retails them for $130. Dr. Su's sourcing cost from a mysterious supplier (best friend back in grad school) is $35. At the end of the season, Maverick estimates the salvage value is only about $25 for each unit. Maverick believes this season's demand can be represented by a normal distribution with a mean of 300 and a standard deviation of 100. The following is the supply chain: Mysterious supplier--> Dr. Su Wholesale--> Maverick Corp. Retail --> customers (e) Consider Dr. Su's store and Maverick retail store as a single entity (vertical integration), what is the optimal order quantity for the single entity?
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