The number of missing items in a certain location, call it X, is a Poisson random variable with mean λ. When searching the location, each item will independently be found after an exponentially distributed time with rate μ. A reward of R is received for each item found, and a searching cost of C per unit of search time is incurred. Suppose that you search for a fixed time t and then stop.

(a) Find your total expected return.

(b) Find the value of t that maximizes the total expected return.

(c) The policy of searching for a fixed time is a static policy. Would a dynamic policy, which allows the decision as to whether to stop at each time t , depend on the number already found by t be beneficial?

Hint: How does the distribution of the number of items not yet found by time t depend on the number already found by that time?