How many seats should super discount overbook the flight

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Reference no: EM131626170

Next week, Super Discount Airlines has a flight from New York to Los Angeles that will be booked to capacity. The airline knows from past history that an average of 29 customers (with a standard deviation of 18) cancel their reservation or do not show for the flight. Revenue from a ticket on the flight is $120. 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 $238. 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?

Reference no: EM131626170

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