1- Slim Shady owns a small firm that manufactures “Cool Shades” sunglasses. He has an opportunity to sell a particular seasonal model to Land’s End….

sunglasses. He has an opportunity to sell a particular seasonal model to Land’s End. Slim offers Land’s End two options:Option 1: Slim offers to set his price at $65 and agrees to credit Land’s End $53 for each unsold unit that Land’s End returns to Slim at the end of the season. Since styles change every year there is no value in the returned merchandise.Option 2: Slim offers a price of $55 for each unit, but returns are no longer accepted. In this case Land’s End throws out the unsold units at the end of the season.This season’s demand for this model is expected to be normally distributed with a mean of 200 and standard deviation of 125. Land’s end will sell those sunglasses at $100 each. Slim’s production cost is $25. a. How much would Land’s End buy if they chose option 1?b. How much would Land’s End buy if they chose option 2?c. If Land’s End chooses option 1 it is expected to have 102 units leftover at the end of the season, and if it chooses option 2 it is expected to have 42 units leftover at the end of the season. Which option will Land’s End choose?d. Suppose Land’s End chooses option 1, and orders 275 units. What is Slim Shady’s expected profit if 96 units are returned?2- Explain the use of outlet stores by retailers such as Saks Fifth Avenue (a luxury retailer) in the context of revenue management. How does the presence of outlet stores help Saks? How does it help its more valuable customer, who is willing to pay full price?3- Do you expect aggregation of inventory at one location to be more effective when a company such as Dell sells computers or when a company such as Amazon.com sells books? Explain by considering inventory and transportation costs.