Airline company X wants to determine how many overbooking they should accept for a particular flight in order to minimize the total cost (or maximize the total profit). Each seat is worth $100. In other words, if a plane fly with a vacant seat, each vacancy costs $100 to the company. If a customer cannot fly due to overbooking, the company must pay each customer $350. The cancellation statistics is attached. What is w, the unit cost of over-stocking overbookings?

Cancellation (C) Frequency Probability 9 Service Level P(C39) 10 1 10 0.05 1/20=0.05 0.05 11 1 11 0.10 12 2 0.10 12 2. 0.10 13 13 14 2 14 0.20 0.30 0.40 0.55 0.70 15 3 0.10 0.15 0.15 0.10 15 16 3 16 17 17 2 2 18 0.10 18 0.80 0.90 0.95 19 1 0.05 19 2n 005 2n 1 nn a $200 b $250 $300 d $350 e No answer above is correct This is a continuation from the previous question. What is s, the unit cost of under-stocking overbookings? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a $100 b $200 $250 d $3500 e No answer above is correct This is a continuation from the previous question. Assume you already found that holding 12 overbookings is better than holding 11 overbookings. Now, do you want to add an extra overbooking (13th overbooking) to make the total number of overbookings equal to 13? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a Yes because the expected benefit of the 13th overbooking exceeds the expected cost of the 13th overbooking b Yes because the expected benefit of the 12th overbooking exceeds the expected cost of the 12th overbooking No because the expected cost of the 13th overbooking exceeds the expected benefit of the 13th overbooking, d No because the expected cost of the 12th overbooking exceeds the expected benefit of the 12th overbooking. e None of the above is correct This is a continuation from the previous question. What is the optimal number of overbookings to make? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a 12 b 13 14 d 15 16 f 17 or more This is a continuation from the previous question. Suppose that the demand for air travel has drastically increased recently and the value of each seat is increased from $100 to $1000 (thus, the cost of each vacancy for the company is increased from $100 to $1000). Does the optimal number of overbookings change? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. No, the optimal number of overbookings stays the same as before. b Yes, the optimal number of overbookings should increase. Yes, the optimal number of overbookings should decrease. d Yes, the optimal number of overbookings should be zero. e No answer above is correct. This is a continuation from the previous question. Suppose the company holds 15 overbookings. What is the probability that 15 overbookings are enough for the number of cancellations they may have? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a 10% b 20% n 30% d 40% e 55% f No answer above is correct