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Questions: Dan's Independent Book Store is trying to decide on how many copies of a book to purchase at the start of the upcoming selling season. The book retails at $28, the publisher's production cost is $15 per book, and the publisher sells books to Dan at $21 each. At the end of the season, Dan can dispose of all the unsold copies of the book at a salvage value of $8.4. Dan estimates that demand for this book during the season is Normal with a mean of 1000 and a standard deviation of 250. What order quantity does Dan choose to maximize his expected profit? What is Dan's profit at the order quantity in part
(a)? What is the publisher's profit at the order quantity in part (a)?
What is the overall supply chain, that is, Dan's and the publisher's combined, profit at the order quantity in part (a)?
e. What is the maximum possible supply chain, that is, Dan's and the publisher's combined, profit? You may assume that the combined supply chain can also dispose all unsold books at $8.4.
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