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1daj
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1. Homework Statement
A vendor at a market buys mushrooms from a wholesaler for $3 a pound, and sells them for $4 a pound. The daily demand (in pounds) from custumers for the vendor;s mushrooms is a random variable X with pdf
f(x) = 1/40 if 0 (greater than) x (less than) 40 and 0 elsewhere
Unsold mushrooms must be thrown out at the end of the day.
Suppose that the vendor buys a constant amount, say C pounds, of mushrooms from the wholesaler at the beginning of each day (0 (less than) C (greater than) 40). Find the expected value of the vendor's daily profit.
I am really confused as to how to set up the solution to this problem and this is how i set it up:
E(profit) = 4 E(demand) - 3C = 4 (integral from 0 to c) x/40 dx - 3C
= 4 (c^2)/80 - 3C
= (c^2)/20 -3C
What troubles me about this solution is that the expected profit is never positive. Furthermore I think my problem is with finding the the Expected demand
Any help is greatly appreciated.
A vendor at a market buys mushrooms from a wholesaler for $3 a pound, and sells them for $4 a pound. The daily demand (in pounds) from custumers for the vendor;s mushrooms is a random variable X with pdf
f(x) = 1/40 if 0 (greater than) x (less than) 40 and 0 elsewhere
Unsold mushrooms must be thrown out at the end of the day.
Suppose that the vendor buys a constant amount, say C pounds, of mushrooms from the wholesaler at the beginning of each day (0 (less than) C (greater than) 40). Find the expected value of the vendor's daily profit.
Homework Equations
The Attempt at a Solution
I am really confused as to how to set up the solution to this problem and this is how i set it up:
E(profit) = 4 E(demand) - 3C = 4 (integral from 0 to c) x/40 dx - 3C
= 4 (c^2)/80 - 3C
= (c^2)/20 -3C
What troubles me about this solution is that the expected profit is never positive. Furthermore I think my problem is with finding the the Expected demand
Any help is greatly appreciated.