question: solve all parts A, B, C, D, & E

Becoming extremely busy over the next few months, Sheen decided to hand over the retailing portion of her business to another Hamptonshire resident, Ralph Armentrout. Ralph would run the newsstand from 6 a.m. to 10 a.m. and pay the newsstand rental fee of $30 per day. Based on his review of a copy Anna sent him the night before the paper would be sold, Ralph would estimate demand for the Express and place an order with the printer. The newspapers would be delivered to the newsstand by 6 a.m. the following morning. Ralph would be responsible for any newspapers left unsold at the end of the day.

A) Assuming h =4, (i.e., Sheen has spent four hours creating the profiles section), what would Armentrout's stocking quantity be? To identify the stocking quantity that maximizes Armentrout's profits, try varying Q while holding h in the spreadsheet "Hamptonshire Express Problem #3." (use excel sheet below to solve)

The Hamptonshire Express #3			Cost Parameters
				Computer & Software	$ 10
Daily Demand Parameters		Stocking Quantity	Monthly Newstand Rent	$ 30
Mean	600		100.0000	Printing cost/newspaper	$0.20
Standard deviation	100			Selling price/newspaper	$1
				Salvage value/newspaper	$0
Anna's effort on Feature Section (hours)	4		opp. cost of Anna's time ($/hour)	10.00
				transfer price from Pam to Ralph	$0.8
			Channel Profits (Anna+Ralph)
			-$0.000005
	Anna's Profit			Ralph's Expected Profit
	$10.000000			-$10.000005
per day; (Revenues - printing cost - rent-computers & software - cost of effort)	per day; (expected revenues-purchase costs-expected shortage-rent)

B) Why does the optimal stocking quantity differ from the optimal stocking quantity identified in Problem #2? Is the result here consistent with the newsvendor formula?

C) Now try varying h in spreadsheet "Hamptonshire Express: Problem #3c") to see what happens to Sheen's profit. (Note: this spreadsheet calculates the optimal newsvendor calculation for differentiated channel to maximize Ralph's profit.) Does her optimal effort in this question differ from the answer to question 2. Why or why not? (use excel sheet below to solve)

The Hamptonshire Express #3c			Cost Parameters
				Computer & Software	$ 10
Daily Demand Parameters		Stocking Quantity	Monthly Newstand Rent	$ 30
Mean	600		515.8379	Printing cost/newspaper	$0.20
Standard deviation	100			Selling price/newspaper	$1
				Salvage value/newspaper	$0
Anna's effort on Feature Section (hours)	4.00		opp. cost of Anna's time ($/hour)	10.00
				transfer price from Anna to Ralph	$0.8
			Channel Profits (Anna+Ralph)
			$321.506534
	Anna's Profit			Ralph's Expected Profit
	$259.502726			$62.003808

D) How would changing the transfer price from the current value of $0.80 per newspaper affect Sheen's effort level and Armentrout's stocking decision? Try changing the transfer price in the spreadsheet "Hamptonshire Express: Problem #3d." (Embedded in this spreadsheet are formulas for h and Q.) (use excel sheet below to solve)

The Hamptonshire Express # 3d			Cost Parameters
				Computer & Software	$ 10
Daily Demand Parameters			Stocking Quantity	Monthly Newstand Rent	$ 30
Mean	569		501.3010	Printing cost/newspaper	$0.20
Standard deviation	100			Selling price/newspaper	$1
				Salvage value/newspaper	$0
Anna's effort on Feature Section (hours)	1.8906		opp. cost of Anna's time ($/hour)	10.00
				transfer price: Anna to Ralph	$0.75
			Channel Profits (Anna+Ralph)
			$327.219156
	Anna's Profit			Ralph's Expected Profit
	$246.809314			$80.409843

E) What conclusions can you draw about stocking and effort levels in a differentiated channel vis--vis an integrated firm that manufactures and retails its product?