Stereo Goods is a distributor of videotapes. Video Mart is a local retail outlet which sells blank and recorded videos. Video Mart purchases tapes from Stereo Goods at $5.00 per tape; tapes are shipped in packages of 25. Stereo Goods pays all incoming freight, and Video Mart does not inspect the tapes due to Stereo Goods’ reputation for high quality. Annual demand is 104,000 tapes …
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