Distribution Risk in EE

A typical supply chain for functional products produced in EE and sold in both EE and ME is shown in Eig. 7.8. Because of the distribution uncertainties, it is sold in EE through a distributor. 

Consider a simple case of a company producing a functional product in EE and selling it only in EE through a distributor (Rekik et al. 2010). Because of distribution uncertainties, we assume that out of Q units shipped only PQ units arrive at the market As there is also a supply side uncertainty in EE modeled as y in Hg. 7.4, we may express the manufacturer s expected profit aspEp Ey EoMin pyQ,D) cEy yQ. 

Assuming unit sales price of 20, expected revenue = 3,001.4 Expected quantities procured= (180)(0.5) + (450)(0.3) + (720)(0.2)) =366. Assuming a unit purchase price of 4 the expected cost of purchase will be = 1,476. 

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