SCM 366 Revenue Management Assignment II II. San Francisco Express Airlines, SaFE for short, flies from PHL to...

90.2K

Verified Solution

Question

General Management

SCM 366
Revenue Management Assignment II
II. San Francisco Express Airlines, SaFE for short,flies from PHL to SFO. On a Thursday evening flight, the number oflast-minute no-shows and cancellations is Poisson distributed withmean 7.5. SaFE has an unlimited number of low fare travelers whopay $300. The cost of bumping such a passenger is estimated to be$350 (due lost goodwill as well as the cost of routing theiritinerary through other airlines). SaFE offers this lowfare because it also comes with a cancellation/rebooking fee of$150 – if a customer doesn’t show up for the flight or cancels herreservation, she must pay $150 to use the ticket on anotherflight.
To maximize revenue from this flight, how many seatsshould the airline overbook?
Customers are more reliable on the Friday eveningflight. On that flight, the average number of no-shows andcancellations is Poisson with mean 4.5. Suppose SaFE overbooks thatflight by 6 seats. What is the probability that at least 1passenger will be bumped from this flight?
PLEASE ANSWER IT IN EXCEL SHEET WITHEXPLANATION

Answer & Explanation Solved by verified expert

4.0 Ratings (689 Votes)

1 Cost of overbooking Co 350 300 50 Cost of underbooking Cu 300 revenue lost Service Level SL CuCu Co 30030050 0857143 or 857143 Z NORMSINVSL NORMSINV0857143 1067571 Mean 75 Standard Deviation sqrt75 See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member