Question: 2. Benetton has entered into a quantity flexibility contract for a seasonal product with its retailer. If the retailer orders 0 units, Benetton is willing

2. Benetton has entered into a quantity

2. Benetton has entered into a quantity flexibility contract for a seasonal product with its retailer. If the retailer orders 0 units, Benetton is willing to provide up to another 35 percent if needed. Benetton's production cost is $24 and they charge the retailer a wholesale price of $40. The retailer prices to customers at $55 per unit. Any unsold units can be sold at a salvage value of $25 by the retailer. Benetton can only salvage $10 per unit for its left over inventory. The retailer forecasts demand to be normally distributed with a mean of 5000 and a standard deviation of 1800. (a) How many units O should the retailer order? (b) What is the expected quantity purchased by the retailer (recall that the retailer can increase the order by up to 35 percent after observing demand)? (c) What is the expected quantity sold by the retailer? (d) What is the expected overstock at the retailer? (e) What is the expected profit for the retailer? (f) What is the expected profit for Benetton

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