Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

We have 3 airports: San Francisco (SFO), Denver (DIA), and St. Louis (STL), and two flight-legs (resources): SFO-DIA and DIA-STL. We want to sell 3

We have 3 airports: San Francisco (SFO), Denver (DIA), and St. Louis (STL), and two flight-legs (resources): SFO-DIA and DIA-STL. We want to sell 3 itineraries (products): SFO-DIA, DIA-STL, and SFO-DIA-STL. Suppose you are in time period t in the booking window. Assume that we have at most one product request in every time period. A part of the value function for time period t + 1 has been computed and given in the following table.

Remaining capacity for DIA-STL
0 1 2 3
0 0 600 900 1000
1 300 700 1000 1300
2 400 800 1100 1300
3 500 850 1100 1300

Remaining capacity for SFO-DIA

For example, if the remaining capacity on flight leg SFO-DIA is 2 and the remaining capacity on flight leg DIA-STL is 1, then the value of the value function at time period t+ 1 is Vt+1([2, 1]) = 800.

(a) Assume that the remaining capacity on flight leg SFO-DIA is 1 and the remaining capacity on flight leg DIA-STL is 2 at time period t. Suppose we get a request for a SFO-DIA flight for $150. Is it optimal to accept a this request? Why?

(b) Assume that the remaining capacity on flight leg SFO-DIA is 2 and the remaining capacity on flight leg DIA-STL is 3 at time period t. Is it optimal to accept a request for a SFO-DIA-STL itinerary for $275 at time period t? Why?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting A Focus On Interpretation And Analysis

Authors: Richard F Kochanek, A Douglas Hillman

7th Edition

1111061750, 9781111061753

More Books

Students also viewed these Finance questions