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=1/3, approximately how many papers should he purchase so as to maximize his expected profit?
I'm not really sure how to approach this problem. More specifically, how does the "buy at 10 cents sell at 15 cents" fit into the problem? How does that fit into my binomial equation?
Thank you