Publisher for delivery at beginning of the two-month period

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Reference no: EM131176251

A publisher sells books to Barnes & Noble at $15 each. The unit production cost for the publisher is $3 per book. Barnes & Noble prices the book to its customers at $28 and expects demand over the next two months to be normally distributed, with a mean of 15,000 and a standard deviation of 4,000. Barnes & Noble places a single order with the publisher for delivery at the beginning of the two-month period. Currently, Barnes & Noble discounts any unsold books at the end of two months down to $4, and any books that did not sell at full price sell at this price. a) How many books should Barnes & Noble order? What is its expected profit? How many books does it expect to sell at a discount? b) What is the profit that the publisher makes given Barnes & Noble’s actions above?

Reference no: EM131176251

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