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A flight has 100 seats and a passenger fare of $130. The denied-boarding cost is $390 per denied boarding, and the no-show rate is 0.16.

A flight has 100 seats and a passenger fare of $130. The denied-boarding cost is $390 per denied boarding, and the no-show rate is 0.16. Demand for this flight is extremely high; in fact, for any booking limit b<200, bookings will always hit the booking limit. What is the optimal total booking limit in this case? What is the corresponding expected net revenue? How much does the airline gain from overbooking in this case?

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