[Newsboy Model]

A publisher sells books to
Borders at $10 each. Borders prices the
book to its customers at $17 and expects demand over the next two
months to be normally distributed, with a mean of 50,000 and a
standard deviation of 30,000. Borders places a single order with
the publisher for delivery at the beginning of the two-month
period. Currently, Borders discounts any unsold books at the end of
two months down to $5, and any books that did not sell at full
price sell at this price.

Borders will consider this book to be a bestseller if it sells
100,000 copies. What is the probability that it is a
bestseller?

What order quantity maximizes Borders’ expected profit?

How much is this expected profit?

What is the corresponding fill rate?

How many books does Borders expect to sell at a discount?

The marginal production cost for the publisher is $3 per
book.   How much profit does the publisher make given
Borders’ actions

Please answer in word or PDF format. Thanks!!