*Include all calculations and no excel please*
A buyer for National Sports must place orders with Saucony priorto the time the shows will be sold as they are manufacturedoverseas and shipping takes several months.  The buyermust decide on November 1 how many pairs of the latest modelSaucony’s to order for sale during the coming summer season.Saucony’s ordering policy requires retailers to purchase shoes inlots of 100 pair.  Saucony charges National Sports $45per pair.  National retails them at $70 perpair.  Any pairs remaining unsold at the end of thesummer season will be sold at a 50% closeout sale next fall ($35per pair).  Market research by Nielsen suggests thefollowing probabilities of demand for the new shoes:
| Demand (100s of pairs) | Probability |
| 3 | 0.10 |
| 4 | 0.20 |
| 5 | 0.35 |
| 6 | 0.30 |
| 7 | 0.05 |
- Draw and solve a decision tree for this problem. How many shoesshould National order?Ă‚Â Ă‚Â
- How much profit will they actually earn?
- Compute the value of perfect information regarding demand forthe new style.
- Ipsos is offering additional market research to help Nationalrefine the probability of demand.Ă‚Â Ă‚Â The price of themarket research is $5000.Ă‚Â Ă‚Â Should you: (a) snatch it upbecause the price is below the value of perfect information, (b)draw and solve a value of sample information tree to determine howmuch the information is really worth in light of its accuracy sincethe price is below the value of perfect information, or (c) laughin their face because the price is more than the value of perfectinformation and the offer is therefore overpriced.
