The Green Company is a retailer of gourmet bottled pickles that purchases its products from

Whole, a gourmet food manufacturer. Green buys units $($from Whole$)$ at a price of $$15$ per unit

and sells them to customers at $$45$ per unit. Currently Whole produces to Green$$s order and

delivers all requirements at the start of the period. Leftover inventory at the end of the season

will be donated to a charity organization for free. The demand is lost when Green does not have

inventory. Whole$$s production cost is $$10$ per unit.

Demand$($units$)$ Probability

$1000\mathrm{.}2$

$2000\mathrm{.}3$

$3000\mathrm{.}2$

$4000\mathrm{.}3$

$1.$ Given the current information, how many units of products should Green stock to satisfy

demand? What is the associated profit for Whole and Green and for the supply chain in

total?

$2.$ If Whole and Green were one integrated company, how many units would be stocked?

What is the associated profit for the supply chain?

$3.$ Why is there a discrepancy between the previous two questions? What steps would you

recommend to coordinate this supply chain?