Business, 20.03.2020 04:23 madbiebzz

Next week, Super Discount Airlines has a fight from New York to Los Angeles that will be booked to capacity. The airline knows from past history that an average of 25 customers (with a standard deviation of 15) cancel their reservation or do not show for the fight. Revenue from a ticket on the fight is $125. If the fight is overbooked, the airline has a policy of getting the customer on the next available flight and giving the person a free round-trip ticket on a future fight. The cost of this free round-trip ticket averages $250. Super Discount considers the cost of flying the plane from New York to Los Angeles a sunk cost. By how many seats should Super Discount overbook the fight?

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Next week, Super Discount Airlines has a fight from New York to Los Angeles that will be booked to c...