Case analysis (state all calculations and analysis processes required for analysis) Example 2. Demand for Product X follows normal distribution, averaging 100 and standard deviation = 20. Product orders are available only once (order volume=q) during the entire sales period, and are sold for p=$800 (retail price) per unit 1. The wholesale price that the producer sells to the retailer is W=$400 per unit. The surplus stock remaining after the end of the sales period is sold at a discount of s=$300 per unit. Before experiencing the product in detail, customers do not have an accurate grasp of the value of the product's consumption. After purchasing a product, you will experience the product specifically to understand the exact value of the product's consumption. The customer then decides whether to consume or return the product to the end of its life. The probability of a customer returning a product is generally estimated to be beta=20%. If the customer returns, the retailer returns as much as p-z to the customer. z=$100 and is known as the "re-stocking fee." For example, large discount stores Best Buy and Circuit City set z=p x 15% as re-stocking fee when packaging is destroyed. At the end of the sales period, retailers collect (returned) + (overstock) in one place and sell them at a discount.m. The discount selling price is $s=300 per unit.

(a) Determine the Marginal Cost (MC) and Marginal Benefit (MB) of this issue.

(b) Determine the service level that maximizes profit.

(c) Determine the amount of orders that maximise profit.