Atlanta Airlines routinely overbooks its flights from Atlanta to Boston. Overbooking discounted seats can be expensive because providing a bumped passenger with a last minute flight on a competing carrier can cost $450. A 120-passenger jet costs about $6000 to operate from Atlanta to Boston. The average ticket price is $300.
a. Given the frequency of no-shows in the following table, how many seats should be overbooked? (Note: Pay attention to the calculation of the Overbooking Expected loss and Empty seat loss)
b. Atlanta Air offers special rates on its Atlanta/Boston route for the holidays. How would a $200 ticket price affect the number of seats overbooked?
|
No-Shows
|
1
|
2
|
3
|
4
|
5
|
6
|
|
Frequency
|
15
|
10
|
10
|
5
|
5
|
5
|