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Hong Kong Budget ( HKB ) Airline is a small start - up airline that will be offering service to Okinawa using a 1 1

Hong Kong Budget (HKB) Airline is a small start-up airline that will be offering service to Okinawa using a 116-seat McDonnell Douglas MD-90 airliner. They know that they have two groups of passengers: business passengers and leisure passengers. After some market analysis, HKB executives have decided to offer two ticket prices: a HKD750 price for customers who purchase their tickets 21 days in advance (X- fare), and a HKD1,500 price for all others (Y-fare). Assume that customers for these two fare categories come from different pools and customers do not switch. From historical data, HKB managers know that the demand for X-fare is unlimited but Y-fare follows a normal distribution with a mean of 30 and a standard deviation of 10: HKB managers want to maximize their expected revenues on their flight. If so, how many seats should they allocate to each fare category?

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