Supplier manufactures compact

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If a supplier manufactures compact discs at $1 per unit and sells them to music store at $5 per unit. The retailer sells each to the end consumer at $10. The supplier agrees to buy back discs that have not sold at $2. Assume demand is uncertain. We know optimal order size for Music store under the policy is 1,096, and demand follows N(1000,300). (the expected return to supplier is 174). Evaluate the expected profits of the supplier and retailer.

Reference no: EM131791303

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