The demand for a certain weekly magazine at a newsstand is a random variable with probability mass function p(i) = (10i)/18, i = 4, 5, 6, 7. If the magazine sells for $a and costs $2a/3 to the owner, and the unsold magazines cannot be returned, how many magazines should be ordered every week to maximize the profit in the long run?

Solution for Assignment # 3 Sta 5206, 5126 & 4202 Solution for Problem 1 (a) Source Degrees of Sums of Mean F P Freedom Squares Square A 1 0.322 0.322 0.04 0.845 B 2 80.554 40.2771 4.59 0.033 A*B 2 45.348 22.674 2.58 0.117 Error 12 105.327 8.7773 Total 17 231.551 (b) 3 levels were used for Factor B. 18 (c) N=a*b*n => n= ∗ = 2∗3= 3. Therefore 3 replicates of the experiment were performed. (d) H 0