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A publisher sells books to Barnes & Noble bookstore chain at $16 each. Each book costs the publisher $5, including all production and distribution costs. Barnes & Noble places a single order with the

A publisher sells books to Barnes & Noble bookstore chain at $16 each. Each book costs the publisher $5, including all production and distribution costs. Barnes & Noble places a single order with the publisher and prices the book at $24 each. Books are kept on the regular shelf for three months after which they are discounted down to $4 and are guaranteed to sell at this price. Their current forecast at regular price is that sales will be normally distributed with a mean of 25,000 and a standard deviation of 8,000. 3) Develop a buyback contract where the wholesale price and the buyback price are to be designed in a way to coordinate the supply chain. That is, determine the ranges of wholesale price and buyback price values that maximize total supply chain profits. Hint: You must still assume that Barnes & Noble sells the leftover books at $4 and the publisher refunds the difference (b - $4) to implement the buyback contract.

Apr 09 2021 View more View Less

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