Optimal maximum number of reservations to accept on flight

Assignment Help Operation Management

Reference no: EM131664698

A newly created airline, Wolverine Air, has begun to offer service from Chicago to San Francisco with 300 seats. The high fare on the flight is $800 and the restricted/low fare is $400. There is ample demand for the low fare class but high fare demand is random. Further, the customers who buy low fares buy their tickets well in advance before high fare customers. Assume the demand for the high fare is normally distributed with mean 120 and standard deviation of 60.

1. Will your optimal protection level for the high fare be more or less than the average expected demand for the high fare? Why?

2. Wolverine Air has noticed that no shows on the flight have begun to be a problem. Therefore it has decided to implement a policy of overbooking. The number of no-shows is normally distributed with mean of 6 and standard deviation of 5. But overbooking may require bumping passengers off the flight, which has a net cost estimated at $800 per bumped passenger.

What is the optimal maximum number of reservations to accept on the flight? A. 120 B. 121 C. 124 D. 126 E. 128.

Reference no: EM131664698

Questions Cloud

What is the defendant reply to the allegations of lawsuit : What is the defendant's reply to the allegations of a lawsuit? Complaint counterclaim answer summons.

Transformational leadership and continuous-improvement : Synthesize all the following module entries “Transformational leadership, Continuous-Improvement (CI), Ethics and Leadership, Developing and Inspiring Others.

Believe sensitivity analysis is required : believe a sensitivity analysis is required in this case or for a similar business problem where optimal solution to linear programming formulation is desirable

Why should services be near to the customer : Why is it often difficult to match capacity and demand? Why should services be near to the customer?

Optimal maximum number of reservations to accept on flight : What is the optimal maximum number of reservations to accept on the flight?

Company increasing in size outweigh the benefits : What term describes the situation when the costs associated with a company increasing in size outweigh the benefits

Project tracking system should collect information : A project tracking system should collect information on three topics for the project manager.

Why would these two ratios be important for retailers : How does the current ratio compare with the quick ratio and why would these two ratios be important for retailers?

Name five brute force approaches : Name five brute force approaches. Hospital compare and National quality measures?

User Account

All Pages