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JetAirways flight from Philadelphia to Boston has 350 seats. The high fare on the flight is $780 and the restricted/low fare is $500. There is ample demand for the lowfare class but high fare demand is uncertain. Demand for the high fare is normally distributed with mean 150 and standard deviation of 45. Further, the customers buylow fare tickets well in advance of high fare customers.
a. What is the optimal protection level for the high fare tickets?
b. What is the expected revenue (in thousands) from high fare passengers when abooking limit of 200 is selected for the low fare tickets?
c. The JetAirways Customers' Bill of rights states that "Customers who areinvoluntarily denied boarding shall receive $1,200 in addition to a ticketrefund." The RM department notices that the number of no-shows is normallydistributed with mean 7.5 and standard deviation of 3. What is the maximumnumber of reservations in excess of plane capacity that the airline shouldaccept?
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