Newsvendor Problem Set


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Unformatted text preview: hat can produce parkas very quickly but at a higher price than the Asian supplier. Hence, in addition to parkas from Asia, Teddy Bower can buy an unlimited quantity of additional parkas from this American vendor at $15 each after the demand is known. a. Suppose Teddy Bower orders 1500 parkas from Asian supplier. What is the probability that Teddy Bower will order from American supplier once the demand is known? b. Assume order of 1500 from Asian supplier. What is the expected purchase amount from the American supplier? c. Given the future opportunity to purchase from the American supplier at $15 per parka, what is the optimal order quantity from the Asian supplier? d. What is the expected profit for y...
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