Question: We now consider using a revenue sharing contract. We start with a wholesale price w of $ 0 . 7 5 and a revenue share

We now consider using a revenue sharing contract. We start with a wholesale price w of $0.75 and a revenue share percentage y of 0.7. a. What is the retailers optimal order quantity? What can you say on this value? b. Compute the retailers expected profit and the suppliers expected profit under the above revenue sharing contract. What can you conclude? c. When comparing the wholesale price contract to the revenue sharing contract, who benefits? Justify your answer. 4. In Part 3b, you calculated the expected profit earned by the supplier and by the retailer. In some settings, to incentivize the retailer to sign on, the supplier needs to guarantee a minimum expected profit level to the retailer. Find the wholesale price w and the revenue share percentage y that maximize the suppliers expected profit while ensuring the retailer makes at least as much as under the wholesale price contract (see Part 1b).

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