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During the selling season, a swimsuit is sold to customers at $130 per unit. The wholesale price paid by the retailer to the manufacturer is $80 per unit. Any swimsuit not sold during the summer season has a salvage value of $15. The manufacturer has a fixed production cost of $100,000 and a variable production cost per unit of $30. The objective of the retailer is to maximize its expected profit.

What is the optimal ordering quantity of the retailer? Under this ordering quantity, compute the expected profits of the retailer, manufacturer, and the total supply chain.

User DazDylz
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Final answer:

Without detailed demand data, it's not possible to calculate the optimal ordering quantity or expected profits of the retailer, manufacturer, and the supply chain. Key considerations for such calculations would include understanding unit profit, inventory costs and the effect of fixed and variable expenses.

Step-by-step explanation:

The determination of the optimal ordering quantity for a retailer and the calculation of expected profits require the use of mathematical business models like the Economic Order Quantity (EOQ) and profit formulas based on cost and revenue. however the problem provided does not contain the necessary demand data such as the expected number of units that can be sold, or the probability distribution of sales which would allow us to solve for the optimal ordering quantity directly. Similarly, without detailed demand data, we can't compute the expected profits for the retailer, manufacturer, and total supply chain.

Still, we can discuss the key considerations that the retailer should take into account. these include calculating the difference between the selling price and the wholesale price to determine the per-unit profit, subtracting the costs associated with unsold inventory, and recognizing the effect of fixed and variable costs on overall profitability. to deduce the optimal ordering quantity the retailer must conduct a demand forecast, consider holding and ordering costs, and apply relevant inventory management principles. expected profit for the retailer, manufacturer, and supply chain would then be calculated by estimating total revenue, less total costs, which include fixed, variable, and inventory-related expenses.

User SAVVY
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