How much unit is optimal demand

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Reference no: EM132198986

Question: Wholesale contract and buy back contract

Consider a supply chain consisting of a single manufacture and a single retailer. The manufacturer supplies fashion item whose demand will disappear at the end of six months from today ( today is the first day of the first month). The demand and associated cost are given as follow:

Wholesale per unit : $100

Selling price per unit : $175

Salvage value per unit : $20

Fixed production cost : $150,000

Variable cost : $ 40

Profit = Revenue - Variable Cost - Fixed Cost + Salvage

Assume Manufacture min.order quantity is 15,000 units

a. how much unit is optimal demand?

b. calculate retailer profit; manufacturer profit and suply chain profit at optimal demand?

c. If retailer can increase order to be 18000, manufacturer offer to retailer, buy back price is $ 45, assume 5% fashion not sold, calculate supply chain profit?

Reference no: EM132198986

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