Question: Part a) Assume that The Washington Post operates a vertically integrated supply chain (i.e., the WP produces and sells directly to the customers). If the

Part a) Assume that The Washington Post operates a vertically integrated supply chain (i.e., the WP produces and sells directly to the customers). If the production cost of each paper is $0.25, the retail price is $1 and the daily demand is normally distributed with mean 500 and standard deviation of 10 then:

What is the optimal quantity of papers that WP should stock?

Part B) Assume now that the WP decided to focus only on the production of papers. Another firm (lets call that firm Ralph) will be responsible for selling the papers to the customers. If the production cost of each paper is $0.25, the wholesale price (i.e., the price that the WP charges Ralph for each paper) is $0.6 the retail price is $1 and the daily demand is normally distributed with mean 500 and standard deviation of 10 then:

What is the optimal quantity of papers that Ralph should stock?

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