3. If the probability of stock out is calculated at less than “p” would you acce

Question

3. If the probability of stock out is calculated at less than “p” would you accept an order from a non-refund, “pay in advance” economy order? What if the probability is calculated at greater than “p”, would you accept the discount order and what would you decide about the remaining high paying vacant seats?

4. Can you give another business example similar to this problem encountered by the airline industry?

# of seats Price Marginal Profit Total Profit Economy Seats 150 $160 $100 $15,000 High Paying Seats 65 $700 $500 $32,500 Expected Value P * $32,500 P X 32,500 = 15,000 P = 46% The probability of a stock out is 46% 5 days before Quanitity Left Price Marginal Profit Total Profit 65 - 50 15 $700 $500 $7,500 Expected Value P*$32,500 P X $32,500 = $7,500 P = 23%

Explanation / Answer

4)

What if the probability is calculated at greater than “p”

probability is 23%

4)

another business example is an industrial company like manufactured industry

Related Questions

Navigate

• Browse (All)
• Browse 3
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.