A ticket from Indianapolis to Orlando on Deleast Airlines sells for $150. The plane can hold 100 people. It costs Deleast $8000 to fly an empty plane. Each person on the plane incurs variable costs of...


A ticket from Indianapolis to Orlando on Deleast Airlines sells for $150. The plane can hold 100 people. It costs Deleast $8000 to fly an empty plane. Each person on the plane incurs variable costs of $30 (for food and fuel). If the flight is overbooked, anyone who cannot get a seat receives $300 in compensation. On average, 95% of all people who have a reservation show up for the flight. To maximize expected profit, how many reservations for the flight should Deleast book? (Hint: The function RISKBINOMIAL can be used to simulate the number who show up. It takes two arguments: the number of reservations booked and the probability that any ticketed person shows up.)



Dec 21, 2021
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