We consider and simulate the supply chain under a wholesale price contract. As mentioned, we use...

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We consider and simulate the supply chain under a wholesale price contract. As mentioned, we use a retail price of $10, a unit production cost of $2.50, and a (monthly) demand that is normally distributed with mean 1,000 and standard deviation 200. The demand realizations are given in the spreadsheet. a. Under a wholesale price of $5, what is the retailer's optimal order quantity? b. Under a wholesale price of $5, compute the expected profit of the retailer and of the supplier. c. Vary the value of the wholesale price between $2.50 and $10 and find the value that yields the highest possible profit for the supplier. What is this wholesale price value? d. For the wholesale price value obtained in Part 1c, what is the total expected profit of the supply chain (i.e., the sum of the retailer's profit and the supplier's profit)? We consider and simulate the supply chain under a wholesale price contract. As mentioned, we use a retail price of $10, a unit production cost of $2.50, and a (monthly) demand that is normally distributed with mean 1,000 and standard deviation 200. The demand realizations are given in the spreadsheet. a. Under a wholesale price of $5, what is the retailer's optimal order quantity? b. Under a wholesale price of $5, compute the expected profit of the retailer and of the supplier. c. Vary the value of the wholesale price between $2.50 and $10 and find the value that yields the highest possible profit for the supplier. What is this wholesale price value? d. For the wholesale price value obtained in Part 1c, what is the total expected profit of the supply chain (i.e., the sum of the retailer's profit and the supplier's profit)?

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To solve the given problem we need to calculate the retailers optimal order quantity the expected profit of the retailer and the supplier under a whol... View the full answer