South Central Airline; (SCA) operates a commuter flight between Atlanta and Char

Question

South Central Airline; (SCA) operates a commuter flight between Atlanta and Charlotte. The regional jet holds 48 passengers and currently SCA only books up to 48 reservations, first data shows that SCA always sets all 48 reservations, but on average. three passengers do not show up As a result, with 48 reservations, the flight is often being flown with empty seats, to capture additional profit, SCA is considering an overbooking strategy in which they would accept 51 reservations even though the airplane holds only 48 passengers. SCA believes that it will be able to always book all 51 reservations. The probability distribution for the number of passengers showing up when 51 reservations are accepted is estimated as folows: SCA receives a marginal profit of $100 for each passenger who books a reservation (regardless whether they show up or not). The airline will also incur a cost for any passenger denied seating on the flight. This cost covers added expenses of rescheduling the passenger as well as loss of goodwill. estimated to be $140 per passenger. Develop a spreadsheet simulation model for this over booking system. Simulate the number of passengers showing up for a flight (Do 100 simulations). Assume the airline collects revenue from every ticket booked, even if the passenger doesn't show up. What is the average net profit for each flight with the overbooking strategy? If required, round your answer to the nearest dollar. $ 4895 What is the probability that the net profit with the overbooking strategy will be less than the net profit without overbooking (48prime$100 = $4.800)? If required, round your answer to two decimal places..05

Explanation / Answer

(a)The average netprofit is:

47*0.05+48*0.3+49*0.4+50*0.15+51*0.1

=$48.95

(b)The required probability is:

0.05

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