Question: Show the math portion Consider the following demand scenario: Quantity Probability 2000 3% 2100 8% 2200 15% 2300 30% 2400 17% 2500 12% 2600 10%

Show the math portion Consider the following demand scenario:

Quantity Probability

2000 3%

2100 8%

2200 15%

2300 30%

2400 17%

2500 12%

2600 10%

2700 5%

Suppose the toys r us manufacturer produces toys at a cost of $20/unit and sells to the distributor at $40/unit. The distributor sells to end customers for $50/unit during season; unsold units are sold for $10/unit after season.

Assume the manufacturer will buy any unsold items at price $32/unit. What is the optimal order quantity?

What is the expected number of unsold items?

What is the profit for the distributor?

What is the profit for the supplier?

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