## Distribution with pmf and rand. variables.

I posted this in the wrong section before and meant to put it here, so i apologize if you seen this before.

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 variables:
Y_k = # of mags. sold
R_k= the net profit if k mags are ordered.

I am NOT trying to just get the answer out of someone, I just need advice on how to start this..
Do I need to make another pmf for Y_k and R_k? Or do I need to figure out expected value.
just a hint may help me understand this problem
 PhysOrg.com science news on PhysOrg.com >> City-life changes blackbird personalities, study shows>> Origins of 'The Hoff' crab revealed (w/ Video)>> Older males make better fathers: Mature male beetles work harder, care less about female infidelity
 It looks like an open-ended question. First step could be to write down the profit for all 16 combinations {(1 bought, 1 sold), (1 bought, 2 sold), ...} perhaps as a 4x4 table.
 i dont think its open ended, because R_k= -1k+2*Y_k since R_k is the profit could i simply find the expected value is 1, 2, or 3 are sold thats it?

## Distribution with pmf and rand. variables.

That's the open-ended part, it's up to you to choose a selection criteria. Expected value is only one of infinitely many possibilities. It's good that you've got a formula for the profit though it's important to actually look at the values and their relative probabilities (for example, with an appropriate chart) otherwise important details can be hidden.
 okay the profit for k=2 i got 3.8 when i am calculating it for when k=3 is this equation correct? -1(3)+2(.1*1+.2*3.8+.4*3.8+.3*3.8) i may be going off a longshot but i used the profit from k=2 for the values of x in this equation. I just want to make sure im doing k=3 right so i can figure out when k=4...

 Similar discussions for: Distribution with pmf and rand. variables. Thread Forum Replies Calculus 20 Set Theory, Logic, Probability, Statistics 5 Set Theory, Logic, Probability, Statistics 2 Set Theory, Logic, Probability, Statistics 6 Set Theory, Logic, Probability, Statistics 5