Question
A ticket between Corellia and Dantooine (located in a galaxy far far away) sells for $150. The plane can hold 100 people. It costs $8000
A ticket between Corellia and Dantooine (located in a galaxy far far away) sells for $150. The plane can hold 100 people. It costs $8000 to fly an empty plane. Each person on the plane incurs variable costs of $30 (for food and fuel). If the flight is overbooked, anyone who cannot get a seat receives $300 in compensation. On average, 95% of all people who have a reservation show-up for the flight. To maximize profit, how many reservations for the flight should you book?
Hint: You can assume that the number of people that show-up for a flight follows a binomial random variable.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started