- #1
megr_ftw
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Homework Statement
X=demand for the magazine with pmf
x | 1 2 3 4
p(x)| .1 .2 .4 .3
Shop owner pays $1.00 for each copy of mag. and charges $2.00. If mags. left at end of week are not worth anything, is it better to order two, three, or four copies of the mag.?
I know i need to introduce the random variable Y_k = # of mags. sold, while R_k= the net profit if k mags are ordered.
So do I need to find the probability distributions for k=2,3,4,5 in order to answer the quesiton?? I am just lost on how to start this or how to get the pmf for Y
Homework Equations
binomial equation or tables?
The Attempt at a Solution
I don't know how to start this problem but for starters should I make a pmf table for the introduced random variable Y and R??