A retailer is planning to sell a fashion garment, to be manufactured in China, during the...

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A retailer is planning to sell a fashion garment, to be manufactured in China, during the upcoming spring season. The manufacturer's (supplier's) cost of producing and shipping (it pays for transportation to market, as stipulated contractually) these items to the retailer is $20/unit and will charge a wholesale price of $60/unit. The retailer has determined that this item's demand would be normally distributed with a coefficient of variation of 0.4. The expected demand is fairly price sensitive and has been estimated to have a linear price-demand relationship as follows: Mp=16,000-40p, where up is the mean demand in units resulting from a retail price of p dollars per unit. All overstock of this garment at the retail level will be disposed of at the end of the season with a salvage value (markdown sale price) of $10/unit. The retailer wishes to maximize its expected revenue generated by this item during the spring season. (a) If the retailer wishes to maximize its own expected revenue generated by this item during the spring season, what retail price should it charge for this item and how many of these should be ordered from the supplier in China? Determine the resulting expected profits for the retailer, the supplier and the entire supply chain. (b) What unit retail price (to the nearest dollar) should the retailer set, in order to maximize its own expected profit, instead of revenue? What are the resulting order quantity and the expected profits for the retailer, supplier and the supply chain? (c) The supplier is considering making an offer of buying back from the retailer any unsold items at the end of the season for $14/unit and feels that it can sell all of these to a U.S. discount retailer for $16.50 a unit. Should this offer be made and should the retailer accept it? As a result of this buy-back policy, what are the percentage changes in the expected profits of the buyer, supplier and the entire supply chain, in comparison with your results obtained in part (b)? A retailer is planning to sell a fashion garment, to be manufactured in China, during the upcoming spring season. The manufacturer's (supplier's) cost of producing and shipping (it pays for transportation to market, as stipulated contractually) these items to the retailer is $20/unit and will charge a wholesale price of $60/unit. The retailer has determined that this item's demand would be normally distributed with a coefficient of variation of 0.4. The expected demand is fairly price sensitive and has been estimated to have a linear price-demand relationship as follows: Mp=16,000-40p, where up is the mean demand in units resulting from a retail price of p dollars per unit. All overstock of this garment at the retail level will be disposed of at the end of the season with a salvage value (markdown sale price) of $10/unit. The retailer wishes to maximize its expected revenue generated by this item during the spring season. (a) If the retailer wishes to maximize its own expected revenue generated by this item during the spring season, what retail price should it charge for this item and how many of these should be ordered from the supplier in China? Determine the resulting expected profits for the retailer, the supplier and the entire supply chain. (b) What unit retail price (to the nearest dollar) should the retailer set, in order to maximize its own expected profit, instead of revenue? What are the resulting order quantity and the expected profits for the retailer, supplier and the supply chain? (c) The supplier is considering making an offer of buying back from the retailer any unsold items at the end of the season for $14/unit and feels that it can sell all of these to a U.S. discount retailer for $16.50 a unit. Should this offer be made and should the retailer accept it? As a result of this buy-back policy, what are the percentage changes in the expected profits of the buyer, supplier and the entire supply chain, in comparison with your results obtained in part (b)?

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A a If the retailer wishes to maximize its own expected revenue generated by this item during the sp... View the full answer