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Overbooking flights 2008-07-10
From DON:
Overbooking by Airlines This is a simplified version of calculations used by airlines when they overbook flights. They realize that a certain percentage of ticketed passengers will cancel at the last minute. Therefore, to avoid empty seats, they sell more tickets than there are seats, hoping that just about the right number of passengers show up. We will assume that the no-show rate is five percent. For a flight with 220 seats, the airline wants to find how sensitive various probabilities are to the number of tickets it issues. In particular, it wants to calculate
a) the probability that more than 225 passengers show up
b) the probability that more than 220 passengers show up
c) the probability that at least 215 seats will be filled
d) the probability that at least 210 seats will be filled.
To assess the benefits and drawbacks of issuing various numbers of tickets on an airline flight with 220 seats, create a table showing as many different scenarios as possible (table only on one page when printed) and use a second page for your analysis and recommendation to the airline. Which are the good cases, which are the bad cases for the airline?

Answered by Janice Cotcher.



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