Consider a manufacturer sellin

Consider a manufacturer selling DVDs to a retailer for $6
per DVD. The production cost of each DVD is $1 and the retailer prices each DVD
at $10. Retail demand for DVDs is normally distributed, with a mean of 1,000
and standard deviation of 300. The manufacturer has offered the retailer a
quantity flexibility contract with The retailer places an order for 1,000
units. Assume that salvage value is zero for both the retailer and the
manufacturer.

a. What is the expected profit for the retailer and
manufacturer?

b. How much will profit increase for the retailer if
increases to 0.5?

c. How much will profit increase for the retailer if
increases to 0.5 (keeping at 0.2)?