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Transcript 
Models
• B2B and B2C Models
• Example: Supply Contract and Pricing Decisions
• Assume:
• Co-op suggests the sales price (p2) for its products to wholesalers
• Wholesaler decides on an order quantity (D) so as to minimize
the total cost
• Wholesaler faces random demand later from retailers and may
need to pay either a holding cost (h) or a shortage penalty (s)
• The pdf and cdf or the random demand is given by:
 (x )
and
 (x )
Department of Industrial and Manufacturing Systems Engineering
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