Tech3D has been asked by a medical device company (Hackpak) to make a specialized vaccine packaged product for them. Tech3D will need to make a rather large unique investment in order to do this. Hackpack will charge $1000 per vaccine kit, and it is estimated that at that price the monthly market demand is: 5,000 with probability of 0.3, 10,000 with probability of 0.5, and 15,000 with probability of 0.2. Tech3D has also determined that over the long run, their production cost per kit is $600. In order to be worthwhile for their investors, they determine that they will need to charge Hackpak $800 per kit. Hackpak places orders each month, but because the vaccine kit has a short shelflife they cannot inventory it for future periods (i.e., newskid assumptions hold). Unsold vaccine kits at the end of the month have no salvage value. The cost of a kit to Hackpak is the price that they pay Tech3D plus $50 for handling and packaging. Answer the following:

a.Under the current arrangement, determine the expected profit for both Hackpak and Tech3D.

b. Develop a buyback contract (if possible) that would make both Hackpak and Tech3D better off.

c. Repeat part b, using a revenue sharing contract (if possible)