3.6 Binomial probabilities 3.6.1 Binomial probabilities and random variables.
Binomial probabilities occur when we repeatedly do something that has two possible outcomes and we count the number of times that one or the other outcome occurs. Example 3.6.1.
3.5 Machine Replacement
This section looks at machine replacement problems which are another type of stochastic optimization
problems. In the first part we consider the concepts involved while in the second we illustrate how to
do some of the computations
3.7 Continuous probability.
So far we have been considering examples where the outcomes form a finite or countably infinite set. In
many situations it is more natural to model a situation where the outcomes could be any real number or
vectors of real numb
3.4 Single period inventory
We buy some item wholesale and sell it retail. The demand for the item varies, so we treat it a random variable.
We want to know how many to buy wholesale so as to maximize the expected profit.
Example 3.4.1: Each day a newssta
3.1 Probability concepts
This section is an introduction to some of the basic concepts of probability. Let's begin by considering
what we mean by probability.
3.1.1 Probabilities of outcomes and events.
Example 1.1. A company manufactur