Business, 24.03.2021 21:40 xchainq

An Airline serving Denver International Airport and Steamboat Springs, Colorado, is considering overbooking its flight to avoid flying with empty seats. Historical data suggest that the number of passengers who reserve a seat but do not show up for departure is normally distributed with mean 20 and standard deviation 8. The one-way ticket sells for $120. In case of overbooking, the airline has to pay a compensation of $300 and the net loss is $180 per ticket. According to the above information, answer questions 34-35. 1. What would be your recommendation for overbooking if a one-way ticket sells for $80 and the cost of not honoring a reservation is a free lift ticket worth $50 plus a seat on the next flight?
2. What is the expected profit per flight for your overbooking choice?

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An Airline serving Denver International Airport and Steamboat Springs, Colorado, is considering over...

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