Southwest Airlines offers 11 flights between Chicago and Phoenix daily. A "Wanna Get Away" one-way fare is $182, while an "Anytime" one-way fare is $398. Assume that 137 seats are available on a Southwest Airlines 737-300 aircraft.

 

a. What is the optimal booking limit on "Wanna Get Away" seats if Southwest Airlines expects 30 "Anytime" customers, plus or minus 15, at one standard deviation? How many seats would be protected for "Anytime" customers?

 

b. What is the optimal booking limit on "Wanna Get Away" seats if Southwest Airlines expects 60 "Anytime" customers, plus or minus 30, at one standard deviation? How many seats would be protected for "Anytime" customers?

 

c. Given this fare structure, is the optimal number of "Anytime" fare seats protected for Southwest greater than or less than the anticipated expected "Anytime" fare seats demanded?