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3. Dan McClure's Bookstore is trying to decide how many copies of a book to purchase. The publisher charges Dan $20 for the book, which will retail for $28. Unsold copies can be sold after the selling season at 75% off of the retail price. Demand for the book is estimated to be normally distributed with a mean of 100 and a standard deviation of 42. Using a standard Newsvendor model, Dan finds the expected profit maximizing order quantity is 88, and his expected profit is $456.12. Further, given that the publisher's cost per book is $7.50, and Dan's order quantity of 88, the publisher's profit is $1100. (You don't need to recalculate this.) The publisher is thinking of offering McClure the following deal: At the end of the season the publisher will buy back unsold copies at a set price of $15 per book. McClure, however, must bear the cost of shipping unsold copies of $1.00 per book. a) With the $15 buyback deal, now how many books should McClure order? Q= b) Given the order quantity in part a), what is Dan's new expected profit? Expected Profit = c) Suppose the publisher can salvage $6.00 per returned book net of all handling costs. What is the publisher's expected profit? (This is just revenue minus cost for the initial sale to Dan, plus revenue minus cost-which will be negative-for the buybacks.) Expected Profit = d) Instead of $15, what buyback price should the publisher offer to pay McClure for returned copies to maximizethe supply chain's total profit? Buyback Price = e) Are Dan and the publisher both better off with this buyback price compared to the $15 buyback price originally offered (Circle an answer below)? Show your calculations. Yes No