Question
BlueSky is replacing the three aircraft that fly in and out of its Houston hub. It plans to purchase the three new aircraft from the
BlueSky is replacing the three aircraft that fly in and out of its Houston hub. It plans to purchase the three new aircraft from the Airbus A330/A340 family. BlueSky has already decided to configure the three aircraft with only coach seats and no first-class cabin, but the airline has not yet decided on the size of the aircraft. The A330/A340 family comes in a wide range of sizes, from 240 to 380 coach seats.
To decide on an aircraft size, BlueSky must consider both the cost and revenue implications. On the cost side, a larger aircraft is more expensive to purchase and more costly to operate. The purchasing terms and performance data show that the total cost of one flight from, say, Houston to Miami, includes a fixed cost of $12,000 and an additional cost of $40 per seat. These numbers are calculated from all costs associated with the flight, including fuel, labor, and maintenance.
Note: You can use these costs for all six legs. The cost parameters for the other five flights in each bank in and out of Houston are nearly identical because all six flights are approximately the same length.
Adjust the objective function from Case A to incorporate these costs. That is, change the problem from a revenue maximization problem to a profit maximization problem.
Note: Your objective function formula should reference other cells when possible. That way, if you change the size of the plane, the cost will automatically update.
What is the total profit associated with one bank?
Now, assume that Blue Sky is not limited to purchasing aircraft with 240 coach seats. However, they still plan to order three identical aircraft.
How many coach seats should BlueSky order for the three new aircraft in order to maximize profit for a single bank? In other words, what is the optimal number of seats?
Note: The number of coach seats can range from 240 to 380.
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