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“The manufacturer is trying to decide how many units to produce for the upcoming season. If too many products are produced, some of the products may be left unsold by the manufacturer to the distribution center. If too few products are produced, the manufacturer may lose some potential profit it could make from sale to the distribution center.” A similar challenge is faced by the distribution center. In other words, if too many products are bought by the distribution center from the manufacturer, some of the products may be left unsold by the distribution center to the retail stores. If too few products are bought by the distribution center, the distribution center may lose some potential profit it could make from sale to the retail stores. Discuss how the manufacturer and the distribution center can resolve their respective challenges while neither party should benefit at the expense of the other.

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Operation Management, Management Studies

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