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What payback price should the retailer offers

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Reference no: EM132958824

Question - You are the manager of leading printing service. It costs you 20 cents to make a newspaper, and you can sell it to the retailer at 80 cents. The retailer sells to customer at $1 per newspaper.

The retailer is fully refunded for any unsold newspaper. To encourage you to print more newspaper, the retailer agrees to pay back c cents for unsold newspaper. Demand for newspaper is normally distributed with mean 50 and standard deviation 9. What payback price should the retailer offers to maximize the combined profit of you and retailer?

Reference no: EM132958824

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