A retailer Tokyo sells cheese products in the market at a fixed retail price p. The...

 

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A retailer "Tokyo" sells cheese products in the market at a fixed retail price p. The demand of the cheese product is stochastic/random in nature and denoted by x. "Tokyo" procures its products from a manufacturer "Rio." Now, the retailer "Tokyo" and the manufacturer "Rio" plan to collaborate using a specially-designed supply contract namely, "Buyback revenue sharing contract (BBRS)," initiated by "Rio." As per this contractual agreement, the Tokyo shares a fraction (1-0) of its regular sale revenue with Rio. In return, Rio sells the product to Tokyo at a reduced price (w-d) per unit instead of its usual wholesale price w. Also, at the end of the season, "Rio" procures the unsold products from "Tokyo" at a buyback price b. Rio incurs a production cost of c per unit of the quantity. In the absence of the BBRS contract, "Tokyo" sells the unsold product at a salvage price v. If "Tokyo" accepts the contract, then it places an order quantity Q to "Rio." Based on the information given above, a) Determine the expected profit functions of the Tokyo and Rio under Buyback revenue sharing contract (BBRS) [2+2=4] b) What is the optimal or profit maximizing order quantity for Tokyo under Buyback revenue sharing contract (BBRS)? [2] (mean demand is a and standard deviation is B) c) Determine the coordinating buyback price under Buyback revenue sharing contract (BBRS) in terms of retail price p, production cost c, revenue sharing parameter 0, and salvage price v [1.5] A retailer "Tokyo" sells cheese products in the market at a fixed retail price p. The demand of the cheese product is stochastic/random in nature and denoted by x. "Tokyo" procures its products from a manufacturer "Rio." Now, the retailer "Tokyo" and the manufacturer "Rio" plan to collaborate using a specially-designed supply contract namely, "Buyback revenue sharing contract (BBRS)," initiated by "Rio." As per this contractual agreement, the Tokyo shares a fraction (1-0) of its regular sale revenue with Rio. In return, Rio sells the product to Tokyo at a reduced price (w-d) per unit instead of its usual wholesale price w. Also, at the end of the season, "Rio" procures the unsold products from "Tokyo" at a buyback price b. Rio incurs a production cost of c per unit of the quantity. In the absence of the BBRS contract, "Tokyo" sells the unsold product at a salvage price v. If "Tokyo" accepts the contract, then it places an order quantity Q to "Rio." Based on the information given above, a) Determine the expected profit functions of the Tokyo and Rio under Buyback revenue sharing contract (BBRS) [2+2=4] b) What is the optimal or profit maximizing order quantity for Tokyo under Buyback revenue sharing contract (BBRS)? [2] (mean demand is a and standard deviation is B) c) Determine the coordinating buyback price under Buyback revenue sharing contract (BBRS) in terms of retail price p, production cost c, revenue sharing parameter 0, and salvage price v [1.5]

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a The expected profit function of Tokyo under BBRS is EProfitTok... View the full answer