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

Benetton has entered into a quantity flexibility contract with a retailer for a seasonal product. If the retailer ordersO units, Benetton is willing to provide up to another 40 percent (=0.4) if needed and the retailer commits to buying at least 0.95O (=0.05). Benettons production cost is $20, and it charges the retailer a wholesale price of $40. The retailer sells to customers at $60 per unit. Any unsold units can be sold by the retailer at a salvage value of $20. Benetton can salvage only $10 per unit for its leftover inventory. The retailer forecasts demand to be normally distributed, with a mean of 6,000 and a standard deviation of 1,600. The retailer set How may units is the retailer expected to salvage?
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