3. A flight has 100 seats and a passenger fare of $130. The denied-boarding cost is $390 per denied boarding, and the no-show rate is 0.16. Demand for this flight is extremely high; in fact, for any booking limit b<200, bookings will always hit the booking limit. What is the optimal total booking limit in this case? What is the corresponding expected net revenue? How much does the airline gain from overbooking in this case?
3. A flight has 100 seats and a passenger fare of $130. The denied-boarding cost is $390 per denied boarding, and the no-show rate is 0.16. Demand for this flight is extremely high; in fact, for any booking limit b<200, bookings will always hit the booking limit. What is the optimal total booking limit in this case? What is the corresponding expected net revenue? How much does the airline gain from overbooking in this case?
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter11: Simulation Models
Section: Chapter Questions
Problem 47P
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