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Tom owns a small firm that manufactures Tom Sunglasses. He has the opportunity to sell a particular seasonal model to Land's End. Tom offers Land's
Tom owns a small firm that manufactures "Tom Sunglasses." He has the opportunity to sell a particular seasonal model to Land's End. Tom offers Land's End two purchasing options: - Option 1. Tom 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. - Option 2. Tom offers to set his price at $65 and agrees to credit Land's End $53 for each unit Land's End returns to Tom 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 $110 each. a) (5 points) How much would Land's End buy if they choose option 1 ? b) (5 points) How much would Land's End buy if they choose option 2? What is the probability that Land's End will return sunglasses to Tom at the end of the season
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