Question
OIM Airlines, a low-cost airline company, is set to commence daily flights between Hartford and Atlanta this upcoming summer season. The airline will utilize planes
OIM Airlines, a low-cost airline company, is set to commence daily flights between Hartford and Atlanta this upcoming summer season. The airline will utilize planes that are equipped with 110 seats, all designated for economy class. OIMs revenue management department is seeking assistance in formulating an overbooking policy.
OIM assumes their average ticket revenue is $350. If a customer is denied boarding due to overbooking, OIM reimburses the ticket price and provides a free Hartford Atlanta ticket for the next available OIM flight (ensuring it is never oversold), along with a complimentary entry voucher to the luxury OIM lounge at Hartford airport. The cost of complimentary ticket and lounge access for the company is $400 per customer. Unlike the norm, overbooked customers express high satisfaction with this service, contributing to a "gain-of-goodwill" valued at $100 per customer. Given that no-shows are estimated to be uniformly distributed between 0 and 10, how many seats should OIM overbook each day?
Please give right answer
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