Daily Production Rate (Units) 500 R Annual Demand (units/year) 36000 S Setup Cost/Setup $150 k Annual Holding Rate 30% C Total Cost of a Component $80 Days in a year 360 a) Daily Demand (Units) 100 b) Optimal Lot Size (EMQ) 750.00 c) Highest Inventory 600.00 d) Annual Product Cost $2,880,000 e) Annual Holding Cost $9,000.00 f) Annual Setup Cost $7,200.00 g) Total Annual Inventory Cost $2,896,200 h) Length of Production Period 1.5 i) Length of Each Inventory Cycle 7.5 j) Rate of Inventory Buildup/day 400 k) Number of Inventory Cycles/Year 48

For example, the upper right cell shows that if expresso advertises and beantown doesn't advertise, expresso will make a profit of $15 million, and beantown will make a profit of $2 million. assume this is a simultaneous game and that expresso and beantown are both profit-maximizing firms. if expresso decides to advertise, it will earn a profit of $ million if beantown advertises and a profit of $ million if beantown does not advertise. if expresso decides not to advertise, it will earn a profit of $ million if beantown advertises and a profit of $ million if beantown does not advertise. if beantown advertises, expresso makes a higher profit if it chooses . if beantown doesn't advertise, expresso makes a higher profit if it chooses . suppose that both firms start off not advertising. if the firms act independently, what strategies will they end up choosing? expresso will choose to advertise and beantown will choose not to advertise. expresso will choose not to advertise and beantown will choose to advertise. both firms will choose to advertise. both firms will choose not to advertise.