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ControlNext week, Super Discount Airlines has a flight from New York to Los Angeles that will be booked to capacity. The airline knows from history
ControlNext week, Super Discount Airlines has a flight from New York to Los Angeles that will be booked to capacity. The airline knows from history that an average of customers with a standard deviation of cancel their reservation or do not show for the flight. Revenue from a ticket on the flight is $ If the flight is overbooked, the airline has a policy of getting the customer on the next available flight and giving the person a free roundtrip ticket on a future flight. The cost of this free roundtrip ticket averages $ Super Discount considers the cost of flying the plane from New York to Los Angeles a sunk cost
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