Question: The table below is a demand scenario Quantity 2000, 2100, 2200, 2300, 2400, 2500, 2600, 2700 Probability 3%, 8%, 15%, 30%, 17%, 12%, 10%, 5%

The table below is a demand scenario

Quantity 2000, 2100, 2200, 2300, 2400, 2500, 2600, 2700

Probability 3%, 8%, 15%, 30%, 17%, 12%, 10%, 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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