Delta Blue Airlines

Delta Blue Airlines operates a commuter flight between Charlotte and Philadelphia.The plane holds 30 passengers in Economy and 6 passengers in First Class.The airline makes a $100 profit on each passenger in Economy and $200 per passenger in First Class on the flight.When Delta Blue takes 30 Economy reservations and 6 First Class for the flight, experience has shown that on average, two passengers do not show up for each class.As a result, Delta Blue is averaging 28 Economy passengers and 4 First Class passengers with a profit of 28*$100 + 4*$200 = $3600 per flight.The airline operations office has asked for an evaluation of an overbooking strategy where they would accept 32 Economy reservations and up to 8 First Class reservations even though the airplane holds only 30 Economy and 6 First class passengers.The probability distribution for the number of passengers showing up with the new overbooking reservations policy is as follows:

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