Next week, Super Discount Airlines has a flight from New York to Los Angeles that will be booked to capacity. The airline knows from history that an average of 25 customers (with a standard deviation of 13) cancel their reservation or do not show for the flight. Revenue from a ticket on the flight is $135. If the flight is overbooked, the airline has a policy of getting the customer on the next available flight and giving the person a free round-trip ticket on a future flight. The cost of this free round-trip ticket averages $218. Super Discount considers the cost of flying the plane from New York to Los Angeles a sunk cost. By how many seats should Super Discount overbook the flight? Use Excel's NORM.S.INV() function to find the z value.

Next week, Super Discount Airlines has a flight from New York to Los Angeles that will be booked to capacity. The airline knows from history that an average of 25 customers (with a standard deviation of 13) cancel their reservation or do not show for the flight. Revenue from a ticket on the flight is $135. If the flight is overbooked, the airline has a policy of getting the customer on the next available flight and giving the person a free round-trip ticket on a future flight. The cost of this free round-trip ticket averages $218. Super Discount considers the cost of flying the plane from New York to Los Angeles a sunk cost. By how many seats should Super Discount overbook the flight? Use Excel's NORM.S.INV() function to find the z value.

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Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter11: Simulation Models

Section: Chapter Questions

Problem 47P

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Next week, Super Discount Airlines has a flight from New York to Los Angeles that will be booked to capacity. The airline knows from history that an average of 25 customers (with a standard deviation of 15) cancel their reservation or do not show for the flight. Revenue from a ticket on the flight is $125. If the flight is overbooked, the airline has a policy of getting the customer on the next available flight and giving the person a free round-trip ticket on a future flight. The cost of this free round-trip ticket averages $250. Super Discount considers the cost of flying the plane from New York to Los Angeles a sunk cost. By how many seats should Super Discount overbook the flight? Note: Use Excel's NORM.S.INV() function to find the z value. Round z value to 2 decimal places. Round your answer to the nearest whole number.
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