The Flower Cart Stocking Problem

Every dawn a florist buys fresh tulips from the wholesale market at c c per stem and sells them from her cart at p p per stem, with p>c p > c . Tulips wilt overnight, so any stem unsold by closing time is worthless. Daily demand is a random variable with continuous CDF F F and density f f . How many stems q q should she buy each morning to maximize her expected profit?

Answer

Free accounts unlock one worked solution a day. Pro includes every answer.