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Problems Chapter 10 Problem 3 Given the following information, determine the optimal overbooking policy for Talia's Beauty Sal on. The salon's capacity is 8 patrons.

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Problems Chapter 10 Problem 3 Given the following information, determine the optimal overbooking policy for Talia's Beauty Sal on. The salon's capacity is 8 patrons. The historic number of no-shows for a typical day along wi th the probability of occurrence is shown in the table. The average profitability per patron is $10 O and the cost of lost goodwill per patron due to overbooking is approximately $50. No-Shows Probability 0 0.50 0.30 2 0.20 8 Patrons No Shows 1 2 Patrons 8 7 Profits 800 700 600 Turnaways 0 Cost 0 Net Profit 800 700 600 Probability .50 .30 .20 Expected Profits 730.00

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