It is noted that the fiber propagation loss is a random process along the length of propagation. The stochastic nature of the loss process induces a random fluctuation to the energy of the optical signals, which, as an extra source of noise, could become comparable to the amplified-spontaneous-emission noise of optical amplifiers. The optical noise in random loss/gain has a quantum origin, as a manifestation of the corpuscular nature of electromagnetic radiation. This paper adopts the Schrodinger representation, and uses a density matrix in the basis of photon number states to describe the optical signals and their interaction with the environment of loss/gain media. When the environmental degrees of freedom are traced out, a reduced density matrix is obtained in the diagonal form, which describes the total energy of the optical signal evolving along the propagation distance. Such formulism provides an intuitive interpretation of the quantum-optical noise as the result of a classical Markov process in the space of the photon number states. The formulism would be more convenient for practical engineers, and should be sufficient for fiber-optic systems with direct intensity detection, because the quantity of concern is indeed the number of photons contained in a signal pulse. Even better, the model admits analytical solutions to the photon-number distribution of the optical signals.