Example 1 Overbooking is common in airlines, Currently, the number of seats in the aircraft is 200, and the selling price of the seats is $80.- According to the regular distribution, the average number of customers who cancel a seat is 30 and the standard deviation is 15.- If the customer cancels the reservation, Airline will return the seat price of $800 to the customer. + The president of the airline decided to use the Overbooking method. + Thus, Airline's AL (seats plus overbooked seats) > 200, and AL stands for "Authorized Limit". + In case of overbooked seats > number of customer cancellations (e.g., number of overbooked seats = 10. Therefore, if 5 customers cancel their reservations, 205 will be present at the airport. Therefore, 5 will not be able to fly) In this case, the captain will autonomously see if there are any customers on the next flight. Airline will refund $800 for the seat to these customers (customers who voluntarily take the next flight). + We also pay an additional $600 to compensate for the inconvenience these customers will experience. + (a) Determine the Marginal Cost (MC) and Marginal Benefit (MB) of this issue.+ t (b) Determine the service level that maximizes profit. + (c) Decide on AL that maximizes profit. Example 1 Overbooking is common in airlines, Currently, the number of seats in the aircraft is 200, and the selling price of the seats is $80.- According to the regular distribution, the average number of customers who cancel a seat is 30 and the standard deviation is 15.- If the customer cancels the reservation, Airline will return the seat price of $800 to the customer. + The president of the airline decided to use the Overbooking method. + Thus, Airline's AL (seats plus overbooked seats) > 200, and AL stands for "Authorized Limit". + In case of overbooked seats > number of customer cancellations (e.g., number of overbooked seats = 10. Therefore, if 5 customers cancel their reservations, 205 will be present at the airport. Therefore, 5 will not be able to fly) In this case, the captain will autonomously see if there are any customers on the next flight. Airline will refund $800 for the seat to these customers (customers who voluntarily take the next flight). + We also pay an additional $600 to compensate for the inconvenience these customers will experience. + (a) Determine the Marginal Cost (MC) and Marginal Benefit (MB) of this issue.+ t (b) Determine the service level that maximizes profit. + (c) Decide on AL that maximizes profit