a. To simplify the analysis, assume for now that there is virtually no turnaround time between flights

Question:

a. To simplify the analysis, assume for now that there is virtually no turnaround time between flights so the next flight can begin as soon as the current flight ends. (If an immediate next flight is not available, the airplane would wait until the next scheduled flight from that city.) Develop a network that displays some of the feasible routings of the flights. Then develop and apply the corresponding spreadsheet model that finds the feasible combination of flights that maximizes the total profit.

b. Richard is considering leasing additional airplanes to achieve economies of scale. The leasing cost of each one again would be $30,000 per day. Perform what-if analysis to determine whether it would be worthwhile to have 5, 6, or 7 airplanes instead of 4.

c. Now repeat part a under the more realistic assumption that there is a minimum turnaround time of 30 minutes on the ground for unloading and loading passengers between the arrival of a flight and the departure of the next flight by the same airplane. (Most airlines use a considerably longer turnaround time.) Does this change the number of flights that can be flown?

d. Richard now is considering having each of the four airplanes carry freight instead of flying empty if it flies overnight to another city. Instead of a cost of $5,000, this would result in net revenue of $5,000. Adapt the spreadsheet model used in part c to find the feasible combination of flights that maximizes the total profit. Does this change the number of airplanes that fly overnight to another city?

Richard Cook is very concerned. Until recently, he has always had the golden touch, having successfully launched two startup companies that made him a very wealthy man. However, the timing could not have been worse for his latest start-up- a regional airline called Northwest Commuter that operates on the west coast of the United States. All had been well at the beginning. Four airplanes had been leased and the company had become fairly well established as a no-frills airline providing low-cost commuter flights between the west coast cities of (including some new ones) for the coming year that could feasibly be flown by the four airplanes.

A little over a decade ago, Richard had been an honor graduate of a leading MBA program. He had enjoyed the management science course he took then and he has decided to apply spreadsheet modeling to analyze his problem.

The leasing cost for each airplane is $30,000 per day. At the end of the day, an airplane might remain in the city where it landed on its last flight. Another option is to fly empty overnight

Flight Number Expected Revenue ($000) From To Depart Arrive 1257 Seattle 8:00 AM 10:00 AM San Francisco Portland 37 Seat

Seattle, Portland, and San Francisco. Achieving fast turnaround times between flights had given Northwest Commuter an important competitive advantage. Then the cost of jet fuel began spiraling upward and the company began going heavily into the red (like so many other airlines at the time). Although some of the flights were still profitable, others were losing a lot of money.
Fortunately, jet fuel costs now are starting to come down, but it has become clear to Richard that he needs to find new ways for Northwest Commuter to become a more efficient airline.
In particular, he wants to start by dropping unprofitable flights and then identifying the most profitable combination of flights to another city to be ready to start a flight from there the next morning. The cost of this latter option is $5,000.
The table above shows the 22 possible flights that are being considered for the coming year. The last column gives the estimated net revenue (in thousands of dollars) for each flight, given the average number of passengers anticipated for that flight.