Final answer:
Without specific data, it's impossible to provide the exact optimal service level and order quantity for the retailer jacket scenario. For Doggies Paradise Inc., the profit-maximizing output is where marginal cost equals marginal revenue.
Step-by-step explanation:
The question asks about determining the optimal service level and optimal order quantity for a retailer selling jackets. Unfortunately, to accurately determine these values, specific data such as the demand distribution, holding costs, and shortage costs are required. Without this information, it's not possible to apply the necessary inventory management models, like the Newsvendor model, to find the precise answers. However, generally speaking, the optimal service level is the probability that all demand is satisfied without any excess inventory and is found using the cost structure of the product (cost of overage and underage). The optimal order quantity is the number of items that minimizes long-term costs taking into account both purchase costs and potential sales discount during the clearance period.
To answer the question about the micro-level profit maximization for Doggies Paradise Inc., a detailed cost-revenue analysis is required for the given levels of output using concepts from microeconomics. Typically, for profit maximization, a firm will produce up to the point where marginal cost equals marginal revenue. This is because beyond this point, the cost of producing an additional unit exceeds the revenue gained from selling it, which would lower profits.