The ticket price for a New YorkIndianapolis flight is $200. Each plane can hold up to 100
Question:
The ticket price for a New York–Indianapolis flight is $200. Each plane can hold up to 100 passengers. Usually, some of the passengers who have purchased tickets for a flight fail to show up (no-shows). To protect against no-shows, the airline will try to sell more than 100 tickets for each flight. Federal law states that any ticketed customer who is unable to board the plane is entitled to compensation (say, $100). Past data indicate that the number of no-shows for each New York–Indianapolis flight is normally distributed, with a mean of 20 and a standard deviation of 5. To maximize expected revenues less compensation costs, how many tickets should the airline sell for each flight? Assume that anybody who doesn’t use a ticket receives a $200 refund.
Step by Step Answer:
Operations Research Applications And Algorithms
ISBN: 9780534380588
4th Edition
Authors: Wayne L. Winston