The demand distribution for the following problem is as follows: Demand (D) 8,000 10,000 12,000 14,000 Probability 0.11 0.11 0.28 0.22 16,000 0.18 18,000 0.1 r s The following parameters are used in the lecture example for the buy-back contract: Retail Price $125 Salvage Price (to the manufacturer) $20 b Buy Back Price $55 Wholesale Price $80 Variable Production Cost $35 K Fixed Production Cost $100,000 W r s w The following parameters are used in the example for the revenue sharing contract: Retail Price $125 Salvage Value (to the retailer) $20 Revenue Sharing % 15% Wholesale Price $60 Variable Production Cost $35 K Fixed Production Cost $100,000 Assignment: 1. Use the scenario approach to find the optimal order quantity and expected profit for the retailer under a wholesale price only contract. W= $80, P= $125, S=$20, fixed set-up cost F= $100,000. This problem is the same as the example discussed in the class. The purpose is to verify you set up the spread sheets correctly. 2. Calculate the expected profits for the retailer, the manufacturer, and the whole supply chain under the following two buy-back contracts: (1) w=$71 and b=$50; (2) w=$89 and b=$75. 3. Calculate the expected profits for the retailer, the manufacturer, and the whole supply chain under the following two revenue sharing contracts: w=24 and 0=0.6; (2) w=21 and 0=0.4. The demand distribution for the following problem is as follows: Demand (D) 8,000 10,000 12,000 14,000 Probability 0.11 0.11 0.28 0.22 16,000 0.18 18,000 0.1 r s The following parameters are used in the lecture example for the buy-back contract: Retail Price $125 Salvage Price (to the manufacturer) $20 b Buy Back Price $55 Wholesale Price $80 Variable Production Cost $35 K Fixed Production Cost $100,000 W r s w The following parameters are used in the example for the revenue sharing contract: Retail Price $125 Salvage Value (to the retailer) $20 Revenue Sharing % 15% Wholesale Price $60 Variable Production Cost $35 K Fixed Production Cost $100,000 Assignment: 1. Use the scenario approach to find the optimal order quantity and expected profit for the retailer under a wholesale price only contract. W= $80, P= $125, S=$20, fixed set-up cost F= $100,000. This problem is the same as the example discussed in the class. The purpose is to verify you set up the spread sheets correctly. 2. Calculate the expected profits for the retailer, the manufacturer, and the whole supply chain under the following two buy-back contracts: (1) w=$71 and b=$50; (2) w=$89 and b=$75. 3. Calculate the expected profits for the retailer, the manufacturer, and the whole supply chain under the following two revenue sharing contracts: w=24 and 0=0.6; (2) w=21 and 0=0.4
