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A newsboy purchases papers at 10 cents and sells them at
Chapter 4, Problem 33P(choose chapter or problem)
Problem 33P
A newsboy purchases papers at 10 cents and sells them at 15 cents. However, he is not allowed to return unsold papers. If his daily demand is a binomial random variable with n = 10, p =, approximately how many papers should he purchase so as to maximize his expected profit?
Questions & Answers
QUESTION:
Problem 33P
A newsboy purchases papers at 10 cents and sells them at 15 cents. However, he is not allowed to return unsold papers. If his daily demand is a binomial random variable with n = 10, p =, approximately how many papers should he purchase so as to maximize his expected profit?
ANSWER:
Solution:
Step 1 of 2:
A newsboy purchases papers at 10 cents and sells them at 15 cents without replacement.
The daily demand is a binomial random variable with n=10, p=.
We have to find how many papers should purchase so as to maximize his expected profit.