Finding the Largest "Ordered" Difference in Elements of an Array

Problem Detail: 

Suppose we are given an array of positive integers $P = [p_1, p_2, \dots, p_N]$ where each $p_i$ represents the price of a product on a different day $i = 1 \dots N$.

I would like to design an algorithm to find the maximum profit that you can given this array of prices. Profit is made by buying at a given date $i$ and selling at a later date $j$ so that $i \leq j$.

One easy solution is the following "exhaustive algorithm":

profit = 0 for i = 1 to N-1    for j = i+1 to N     if P(j) - P(i) > profit           profit = P(j) - P(i)  

The issue with this however is that it takes time $\Omega(N^2)$.

Can anyone think of something faster?

Asked By : Berk U.

Answered By : Juho

The first observation is that the strategy of buying at the lowest price or selling at the highest price does not always maximize the profit. As you also note, the simple brute-force method works by trying every possible pair of buy and sell dates in which the buy date precedes the sell date. A period of $n$ days has $n \choose 2$ dates and $n \choose 2$ is $\Theta(n^2)$.

To achieve $o(n^2)$ running time, a simple transformation is applied to the input array. Instead of looking at the daily prices given, we will instead work with the daily change in price, where change on day $i$ is the difference between the prices after day $i-1$ and after day $i$. With a transformed input array like this, we now want to find the nonempty, contiguous subarray whose values have the largest sum. This contiguous subarray is called the maximum subarray.

For a detailed divide-and-conquer algorithm running in $\Theta(n \log n)$ time, see for example Chapter 4 of the Cormen et al. book, 3rd edition, page 68-74. The Wikipedia page also mentions Kadane's linear time algorithm and gives pseudocode.

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Question Source : http://cs.stackexchange.com/questions/2583