Southeastern Airlines's daily flight from Atlanta toCharlotte uses a Boeing 737, with all-coach seating for 120 people.In the past, the airline has priced every seat at $140 for theone-way flight. An average of 80 passengers are on each flight.The variable cost of a filled seat is $25. Aysajan Eziz, the newoperations manager, has decided to try a yield revenue approach,with seats priced at $80 for early bookings and at $190 for bookingswithin 1 week of the flight. He estimates that the airline willsell65 seats at the lower price and 35 at the higher price. Variablecost will not change. Which approach is preferable to Mr. Eziz?

Southeastern Airlines's daily flight from Atlanta toCharlotte uses a Boeing 737, with all-coach seating for 120 people.In the past, the airline has priced every seat at $140 for theone-way flight. An average of 80 passengers are on each flight.The variable cost of a filled seat is $25. Aysajan Eziz, the newoperations manager, has decided to try a yield revenue approach,with seats priced at $80 for early bookings and at $190 for bookingswithin 1 week of the flight. He estimates that the airline willsell65 seats at the lower price and 35 at the higher price. Variablecost will not change. Which approach is preferable to Mr. Eziz?

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter12: Queueing Models

Section: Chapter Questions

Problem 59P

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Southeastern Airlines's daily flight from Atlanta to Charlotte uses a Boeing 737, with all-coach seating for 120 people. In the past, the airline has priced every seat at $136 for the one-way flight. An average of 81 passengers are on each flight. The variable cost of a filled seat is $23. Aysajan Eziz, the new operations manager, has decided to try a yield revenue approach, with seats priced at $82 for early bookings and at $195 or bookings within 1 week of the flight. He estimates that the airline will sell 66 seats at the lower price and 33 at the higher price. Variable cost will not change. 1. Total $ contribution in the single price approach is ? (enter your response as a whole number). 2. Total $ contribution in the two price points approach is ? (enter your response as a whole number). 3.Which approach is preferable to Mr. Eziz? A.Proposed model−two price points OR B. Current Model - Single price
Alma has decided to purchase a cell phone with Internetaccess and must choose a rate plan. The “occasional-user”plan is $0.50/minute, regardless of how many minutes ofair time are used. The “frequent-user” plan charges a flatrate of $55/month for 70 minutes of air time plus $0.33/minute for any time over 70 minutes. The “execu-tive” plan charges a flat fee of $75 per month for 100 minutes of air time plus $0.25/minute over 100 minutes. Inthe interest of simplicity, Alma has decided to go with theoccasional-user plan to start with and then upgrade as shesees fit at a later date.a. How much air time per month would Alma need touse before she upgrades from the occasional-user planto the frequent-user plan?b. At what usage rate should she switch from thefrequent-user plan to the executive plan?
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Hotel Galway is a 50 room Boutique hotel in a pop-ular city break destination in Ireland. Until recently the hotel has priced each room at $120 for bed and breakfast. On aver-age 40 rooms are occupied every weekend. The variable cost of each occupied room is $30. Following an internal review man-agement has decided to try a revenue management approach, with rooms priced at $90 for bookings up to one week early and $180 for bookings within a week of their stay. It is esti-mated the hotel will sell 28 rooms at the lower price and 14 at the higher price. Variable costs will not change. Recommendwhich approach is the most feasible.
A company offers ID theft protection using leads obtained from client banks. Three employees work 40 hours a week on the leads, at a pay rate of $12 per hour per employee. Each employee identifies an average of 3,400 potential leads a week from a list of 4,800. An average of 7 percent of potential leads actually sign up for the service, paying a one-time fee of $90. Material costs are $1,400 per week, and overhead costs are $8,900 per week. Calculate the multifactor productivity for this operation in fees generated per dollar of input. (Round your answer to 2 decimal places.) Do you have any suggestions for increasing the productivity of the three employees or for this task?
Acme Steel Fabricators experienced booming business for the past five years. The company fabricates a wide range of steel products, such as railings, ladders, and light structural steel framing. The current manual method of materials handling is causing excessive inventories and congestion. Acme is considering the purchase of an overhead rail-mounted hoist system or a forklift truck to increase capacity and improve manufacturing efficiency. The annual pretax payoff from the system depends on future demand. If demand stays at the current level, the probability of which is 0.60, annual savings from the overhead hoist will be $10,000. If demand rises, the hoist will save $22,000 annually because of operating efficiencies in addition to new sales. Finally, if demand falls, the hoist will result in an estimated annual loss of $50,000. The probability is estimated to be 0.30 for higher demand and 0.10 for lower demand. If the forklift is purchased, annual payoffs will be $5,000 if…
Gator Beach Marts, a chain of convenience grocery stores in the Fort Lauderdale area, has store hours that fluctuate from month to month as the tourist trade in the community varies. The utility costs for one of the company’s stores are listed below for the past six months. Month Total Hoursof Operation Total UtilityCost January 500 $ 2,120 February 600 2,400 March 750 2,850 April 450 2,050 May 400 1,750 June 350 1,650 Required:1-a. Use the high-low method to estimate the cost behavior for the store’s utility costs. Express the cost behavior in formula form (Y= a + bX).1-b. What is the variable utility cost per hour of operation?3-a. Construct an Excel spreadsheet and use the Excel commands to perform a least-squares regression. Estimate the cost behavior for the store's utility cost. Express the cost behavior in formula form.3-b. What is the variable utility cost per hour of operation?4. During July, the…