How many seats should the airline overbook

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Reference no: EM132233731

Suppose that the number of cancellations (C) from passengers on a particular flight is as follows: Prob(C=0)=0.3, Prob(C=1)=0.4, Prob(C=2)=0.2, and Prob(C=3)=0.1. In order to increase the revenue, the airline decides to adopt overbooking by accepting more business passengers. The fare prices for business passengers remain $250 and the denied boarding cost is $650. How many seats should the airline overbook?

Reference no: EM132233731

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