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1. Airline companies usually sell tickets more than the number of seats they have because a certain number of ticketed passengers will cancel at the
1. Airline companies usually sell tickets more than the number of seats they have because a certain number of ticketed passengers will cancel at the last minute. Suppose an airplane has 300 seats, no-show rate is 7%, and there is no penalty for cancellation. When ticket price is $1,000, and overbooked flight compensation is $1,500 per passenger, what is the optimal overbooking ratio to maximize profit?
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