selling price 125 Demand scenario - each retailer 8000 10000 12000 14000

wholesale price 80 Probability 11% 11% 28% 22%

salvage value 20
production cost 35 Decentralized
Order quant. for each retailer
8000 $360,000 $360,000 $360,000 $360,000
9000 $300,000 $405,000 $405,000 $405,000
10000 $240,000 $450,000 $450,000 $450,000
11000 $180,000 $390,000 $495,000 $495,000
12000 $120,000 $330,000 $540,000 $540,000
13000 $60,000 $270,000 $480,000 $585,000
14000 $0 $210,000 $420,000 $630,000
15000 -$60,000 $150,000 $360,000 $570,000
16000 -$120,000 $90,000 $300,000 $510,000
17000 -$180,000 $30,000 $240,000 $450,000
18000 -$240,000 -$30,000 $180,000 $390,000
19000 -$300,000 -$90,000 $120,000 $330,000

Retailer 1's demand scenario

Centralized - Joint probability 8000 10000 12000 14000
8000 1.21% 1.21% 3.08% 2.42%
Retailer 10000 1.21% 1.21% 3.08% 2.42%
2's 12000 3.08% 3.08% 7.84% 6.16%
demand 14000 2.42% 2.42% 6.16% 4.84%
scenario
16000 1.98% 1.98% 5.04% 3.96%
18000 1.10% 1.10% 2.80% 2.20%

Order quant. for the system (R1+R2)

16,000 $720,000 $720,000 $720,000 $720,000
18,000 $600,000 $810,000 $810,000 $810,000
20,000 $480,000 $690,000 $900,000 $900,000
22,000 $360,000 $570,000 $780,000 $990,000
24,000 $240,000 $450,000 $660,000 $870,000
26,000 $120,000 $330,000 $540,000 $750,000
28,000 $0 $210,000 $420,000 $630,000
30,000 -$120,000 $90,000 $300,000 $510,000
32,000 -$240,000 -$30,000 $180,000 $390,000
34,000 -$360,000 -$150,000 $60,000 $270,000
36,000 -$480,000 -$270,000 -$60,000 $150,000
 16000 18000
18% 10%

Expected profit Manufacturer's profit System's profit

$360,000 $360,000 $360,000
$405,000 $405,000 $393,450
$450,000 $450,000 $426,900
$495,000 $495,000 $448,800
$540,000 $540,000 $470,700 $1,080,000 $2,021,400
$585,000 $585,000 $463,200
$630,000 $630,000 $455,700
$675,000 $675,000 $425,100
$720,000 $720,000 $394,500
$660,000 $765,000 $345,000
$600,000 $810,000 $295,500
$540,000 $750,000 $235,500

d scenario both retaliers

16000 18000 Centralized system's de 16000 18000 20000 22000
1.98% 1.10% Acc joint Probability 1.21% 2.42% 7.37% 11.00%
1.98% 1.10%
5.04% 2.80%
3.96% 2.20%
3.24% 1.80%
1.80% 1.00%

Expected profi
$720,000 $720,000 $720,000 $720,000 $720,000 $720,000 $720,000 $720,000
$810,000 $810,000 $810,000 $810,000 $810,000 $810,000 $810,000 $807,459
$900,000 $900,000 $900,000 $900,000 $900,000 $900,000 $900,000 $889,836
$990,000 $990,000 $990,000 $990,000 $990,000 $990,000 $990,000 $956,736
$1,080,000 $1,080,000 $1,080,000 $1,080,000 $1,080,000 $1,080,000 $1,080,000 $1,000,536
$960,000 $1,170,000 $1,170,000 $1,170,000 $1,170,000 $1,170,000 $1,170,000 $1,009,392
$840,000 $1,050,000 $1,260,000 $1,260,000 $1,260,000 $1,260,000 $1,260,000 $979,440
$720,000 $930,000 $1,140,000 $1,350,000 $1,350,000 $1,350,000 $1,350,000 $913,536
$600,000 $810,000 $1,020,000 $1,230,000 $1,440,000 $1,440,000 $1,440,000 $819,240
$480,000 $690,000 $900,000 $1,110,000 $1,320,000 $1,530,000 $1,530,000 $708,900
$360,000 $570,000 $780,000 $990,000 $1,200,000 $1,410,000 $1,620,000 $591,000
 24000 26000 28000 30000 32000 34000 36000
16.64% 18.48% 17.12% 13.52% 7.64% 3.60% 1.00%

Manufacturer's
System's profit
$1,170,000 $2,179,392 $504,696