CM Contract Model_handout1.xlsx - Parameters P C V G Demand...

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Parameters P C V G Demand is uniform (not normal) Min Max Marginal Analysis Cu Co CR Q* L(Q) loss function Sales Excess Inventory Profit
retail price $ 12.0 wholesale cost $ 3.0 salvage $ - goodwill $ - 200 500 foregone revenue / underage cost / understocking cost $ 9.0 overage cost / overstocking cost $ 3.0 Critical ratio - Cu / (Cu + Co) 0.75 optimal stocking level 425.0 (1-CR)*(Max Demand - Q)/2 9.38 Average Demand - L(Q) 190.63 Q - Average Sales 234.38 p x (Average Sales) - w x Q + v x (Average Leftover Inventory) - G x L(Q) p x Sales - $ 2,287.50 Sales Reve c x Q + $ 1,275.00 Product Co v x Excess Inventory - $ - Salvage Re G x L(Q) $ - Goodwill L $ 1,012.50
enue ost evenue Loss
Parameters P retail price 35 C production cost 7 W wholesale price R rebate 0 V salvage value 1.97 GMW goodwill cost for MW 0.5 GCM goodwill cost for CM 0 Demand is normal Mu mean/average demand 10000 Sigma standard deviation 3000 Marginal Analysis Cu foregone revenue / underage cost / understocking cost 28.5 Co overage cost / overstocking cost 5.03 CR Fill rate / Service Level / Critical ratio - Cu / (Cu + Co) 0.850 Q optimal stocking level / order quantity 13,109 Supplier's Average Profit L(Q) loss function average missed sales 233.1100813903 NORMDIST(Q, u, sd, 0) * sd^2 - (1-NORMDIST(Q, u, sd, 1))*(Q - u) Sales Average Demand - L(Q) 9766.8899186097 Excess Inventory Q - Average Sales 3342.218386732 Profit p x (Average Sales) - w x Q + v x (Average Leftover Inventory) - G x L(Q) P x Sales - 341841.147151339 W x Q + 91763.758137392 v x Excess Inventory - 6584.1702218621 G x L(Q) 116.5550406952 Average Channel Profit 256,545.00 A
Parameters P C W R V GMW GCM Demand is normal Mu Sigma

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