A seller stocks at the beginning of the day an item that perishes that same day. On any given day the demand is either 1, 2, 3 or 4 items with probabilities 0.02, 0.05, 0.33 and 0.6. Each item costs to the seller $1 and he sells them for $1.16 each. If an item cannot be sold in the same day, the item perishes and it is a total loss for the seller. Compute the number of items that should be stocked at the beginning of the day to maximize seller's expected daily profit?

A seller stocks at the beginning of the day an item that perishes that same day. On any given day the demand is either 1, 2, 3 or 4 items with probabilities 0.02, 0.05, 0.33 and 0.6. Each item costs to the seller $1 and he sells them for $1.16 each. If an item cannot be sold in the same day, the item perishes and it is a total loss for the seller. Compute the number of items that should be stocked at the beginning of the day to maximize seller's expected daily profit?

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Description: A seller stocks at the beginning of the day an item that perishes that same day. Onany given day the demand is either 1, 2, 3 or 4 items with probabilities 0.02, 0.05,0.33 and 0.6. Each item costs to the seller $1 and he sells them for $1.16 each. I

Advanced Engineering Mathematics

10th Edition

ISBN:9780470458365

Author:Erwin Kreyszig

Publisher:Erwin Kreyszig

Chapter2: Second-order Linear Odes

Section: Chapter Questions

Problem 1RQ

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Concept explainers

Contingency Table

A contingency table can be defined as the visual representation of the relationship between two or more categorical variables that can be evaluated and registered. It is a categorical version of the scatterplot, which is used to investigate the linear relationship between two variables. A contingency table is indeed a type of frequency distribution table that displays two variables at the same time.

Binomial Distribution

Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.

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Question

A seller stocks at the beginning of the day an item that perishes that same day. On
any given day the demand is either 1, 2, 3 or 4 items with probabilities 0.02, 0.05,
0.33 and 0.6. Each item costs to the seller $1 and he sells them for $1.16 each. If an
item cannot be sold in the same day, the item perishes and it is a total loss for the
seller. Compute the number of items that should be stocked at the beginning of the
day to maximize seller's expected daily profit?

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