Problem: You are a retailer. You buy a product at $3.00 from a supplier and sell it for $6.00. It costs the supplier $2.00. Unsold items can be marked down and sold for $1.50. Demand is normally distributed between with mean 200 and standard deviation 50.
Question: Newsvendor with Supplier and Retailer: How would the number of units stocked change if you look at the quantity decision from the perspective of the supply chain consisting of the supplier + retailer? Would the chain's expected profit increase or decrease relative to the quantity choice in part 1 above? Explain the logic behind your answers.