4.2 Overbooking problem-use the critical fractile method (20 points) An airline
ID: 3316833 • Letter: 4
Question
4.2 Overbooking problem-use the critical fractile method (20 points)
An airline serving short routes is considering overbooking the flights to avoid flying with empty seats. The ticket agent is thinking of taking seven reservations for an airplane that has only six seats. During the past month, the no-show experience has been:
No-shows
0
1
2
3
4
Probability
0.30
0.20
0.20
0.15
0.15
The operating cost associated with each flight in total is $300.
What would you recommend for overbooking if a one-way ticket sells for $80 and the cost of not honoring a reservation is a compensation that is worth $30?
No-shows (d)
Reservations Overbooked ( x)
Probability
Cumulative Probability P(d<X)
0
0
0.30
0
1
1
0.20
2
2
0.20
3
3
0.15
4
4
0.15
No-shows
0
1
2
3
4
Probability
0.30
0.20
0.20
0.15
0.15
Explanation / Answer
Cumulative probability can be find using sum up above probability
d Probability P(d<x) 0 0.30 0.30 1 0.20 0.50 2 0.20 0.70 3 0.15 0.85 4 0.15 1Related Questions
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