Great Bows(GB) is a manufacturer of high-end bows and sells their bows through Downtown Sporting Goods(DSG) retail store. Their top-selling bow is called "Sterling." Demand for Sterling is assumed to follow a Normal distribution with a mean of 100 and standard deviation of 35. DSG sells the Sterling for $700, during the hunting season. Once the hunting season is over DSG sells the unsold Sterlings to a discount sporting goods store for $300. GB's unit manufacturing cost is $200. GB is considering charging DSG either $400, or $450, or $500 or $550per unit. What unit price should GB charge to maximize its expected profit and how many units would DSG order at this price. (Please round up all order sizes)

Answer rating: 100% (QA)

To determine the optimal unit price for GB to charge DSG and the corresponding order size we need to calculate the expected profit for each price opti... View the full answer