The objective of this assignment is to get you familiar with the basics of the newsvendor model and the newsvendor solution. You should provide answers to the questions below and submit it electronically on the course website. Geoff Gullo owns a small firm that manufactures "Gullo Sunglasses." He has the opportunity to sell a particular seasonal model to Land's End. Geoff offers Land's End two purchasing options: Option 1. Geoff offers to set his price at $65 and agrees to credit Land's End $53 for each unit Land's End returns to Geoff at the end of the season (because those units did not sell). Since styles change each year, there is essentially no value in the returned merchandise. Option 2. Geoff offers a price of $55 for each unit, but returns are no longer accepted. In this case, Land's End throws out unsold units at the end of the season. This season's demand for this model will be normally distributed with mean of 200 and standard deviation of 125. Land's End will sell those sunglasses for $100 each. Geoff's production cost is $25. Question 1 (1 point) Saved 1. If Land's End chooses option 1, it would purchase Q= 283 DA Question 2 (1 point) 2. If Land's End chooses option 2, it would purchase Q=- A Question 3 (1 point) 3. Suppose Land's End chooses option 1 and order 275 units. Geoff Gullo would earn an expected profit of A Question 4 (1 point) 4. Suppose Land's End chooses option 2 and order 275 units. Land's End's expected lost sales is A expected leftover inventory is A , and expected profit is A The objective of this assignment is to get you familiar with the basics of the newsvendor model and the newsvendor solution. You should provide answers to the questions below and submit it electronically on the course website. Geoff Gullo owns a small firm that manufactures "Gullo Sunglasses." He has the opportunity to sell a particular seasonal model to Land's End. Geoff offers Land's End two purchasing options: Option 1. Geoff offers to set his price at $65 and agrees to credit Land's End $53 for each unit Land's End returns to Geoff at the end of the season (because those units did not sell). Since styles change each year, there is essentially no value in the returned merchandise. Option 2. Geoff offers a price of $55 for each unit, but returns are no longer accepted. In this case, Land's End throws out unsold units at the end of the season. This season's demand for this model will be normally distributed with mean of 200 and standard deviation of 125. Land's End will sell those sunglasses for $100 each. Geoff's production cost is $25. Question 1 (1 point) Saved 1. If Land's End chooses option 1, it would purchase Q= 283 DA Question 2 (1 point) 2. If Land's End chooses option 2, it would purchase Q=- A Question 3 (1 point) 3. Suppose Land's End chooses option 1 and order 275 units. Geoff Gullo would earn an expected profit of A Question 4 (1 point) 4. Suppose Land's End chooses option 2 and order 275 units. Land's End's expected lost sales is A expected leftover inventory is A , and expected profit is A
