A B C D E F G 2 3 4 5 6 7 8 9 10 1 Question 5: The Green Company The Green Company is a retailer of gourmet bottled pickles that purchases its products from Whole, a gourmet food manufacturer. Green buys units (from Whole) at a price of $15 per unit and sells them to customers at $45 per unit. Currently Whole produces to Green's order and delivers all requirements at the start of the period. Leftover inventory at the end of the season will be donated to a charity organization for free. The demand is lost when Green does not have inventory. Whole's production cost is $10 per unit. Given the current information, how many units of products should Green stock to satisfy demand? What is the associated profit for Whole and Green and for the supply chain in total? 11 Inventory Order Size- Leftover Inventory Shortage Extra Inventory Deficient Inventory 12 Demand Cumulative Probability 13 Sales Probability Demand Satisfied 100 0.2 200 0.3 300 0.2 400 0.3 0.2 0.5 0.7 1 E[sales) Exp. Demand Satisfied E[left] Exp. Extra Inventory E[short] Exp. Inventory Deficiency 260 Green's Exp. Profit = 14 15 16 17 18 19 Exp.Value 20 21 22 Green's Selling Price 23 Green's purchase price 24 Salvage Value 25 26 Underage Cost cu= 27 Overage Cost co- 28 29 Critical Ratio = 30 31 32 per unit per unit per unit Possible Inventory Retailer Exp. Profit $ 100 $ 200 $ 300 $ 400 $