1. At the beginning of each semester, BOOKY can order 60, 80, or 100 copies of the book from the publisher, each with differing discounts per book. The ordering costs are listed in the following table. Number of Books Ordered 60 80 100 Ordering Costs 6100 7700 9100 2. BOOKY can either sell the book at the retail price ($130 per copy) or offer a 10% discount ($117 per copy). The demand distributions under different selling prices are listed in the following tables. The demand distribution for the textbook when the selling price is $130 per copy. Demand Probability 70 0.6 90 0.4 The demand distribution for the textbook when the selling price is $117 per copy. Demand Probability 80 0.15 100 0.85 3. Any unmet demand for the textbook will be irrecoverable There are two decision variables in this decision problem: the ordering quantity and the selling price of the textbook. a) If BOOKY is allowed to return unsold textbooks to the publisher for a refund of $80 per copy, find the optimal ordering quantity and selling price of the textbook for BOOKY through decision tree analysis. (You need to submit your decision tree drawn) b) Following (a), BOOKY is unsure about the estimated demand distribution for the textbook when the selling price is $130. Hence, BOOKY wants to conduct a sensitivity analysis to understand the impact of uncertainty in this demand distribution. Suppose that the probability that the demand for the textbook is 70 is Z. Find the range of Z in which the optimal decision made in (a) will not change.
1. At the beginning of each semester, BOOKY can order 60, 80, or 100 copies of the book from the publisher, each with differing discounts per book. The ordering costs are listed in the following table.
| Number of Books Ordered | 60 | 80 | 100 |
| Ordering Costs | 6100 | 7700 | 9100 |
2. BOOKY can either sell the book at the retail price ($130 per copy) or offer a 10% discount ($117 per copy). The demand distributions under different selling prices are listed in the following tables.
The demand distribution for the textbook when the selling price is $130 per copy.
| Demand | Probability |
| 70 | 0.6 |
| 90 |
0.4 |
The demand distribution for the textbook when the selling price is $117 per copy.
| Demand | Probability |
| 80 | 0.15 |
| 100 |
0.85 |
3. Any unmet demand for the textbook will be irrecoverable
There are two decision variables in this decision problem: the ordering quantity and the selling price of the textbook.
a) If BOOKY is allowed to return unsold textbooks to the publisher for a refund of $80 per copy, find the optimal ordering quantity and selling price of the textbook for BOOKY through decision tree analysis. (You need to submit your decision tree drawn)
b) Following (a), BOOKY is unsure about the estimated demand distribution for the textbook when the selling price is $130. Hence, BOOKY wants to conduct a sensitivity analysis to understand the impact of uncertainty in this demand distribution. Suppose that the probability that the demand for the textbook is 70 is Z. Find the range of Z in which the optimal decision made in (a) will not change.
Please help, this question cannot be split :(
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