Passengers and astandard deviation of 4 passengers

Assignment Help Operation Management

Reference no: EM131031386

Offwego Airlines has a daily flight from Chicago to Las Vegas. On average, 18 ticket holderscancel their reservations at the last minute, so the company intentionally overbooks the flight.Cancellations can be described by a normal distribution with a mean of 18 passengers and astandard deviation of 4 passengers. Profit per passenger is $99. If a passenger arrives butcannot board due to overbooking, the company provides compensation of $200 in cash.

a. What is the cost of stocking out (i.e., not having enough seats)?

b. What is the cost of an unsold seat?

c. How many tickets should be overbooked to maximize expected profit?

Reference no: EM131031386

Questions Cloud

Find a great discrepancy in service levels : After graduation, you decide to go into a partnership in an offi ce supply store that has existed for a number of years. Walking through the store and stockrooms, you fi nd a great discrepancy in service levels.

Discuss the various pricing objectives : Discuss the various pricing objectives that are available to Juice Boost and conclude by appraising and choosing a pricing strategy for Boost Juice in Malaysia.

Which of the following controls would prevent dispute : Which of the following controls would prevent dispute over the charges billed by independent contractors?a) Timely recording of both commitments and expenditures.b) A written agreement containing provisions for billing charges.c) Appropriate segregat..

Dry cleaning and hydraulic fracturing industries : Five-paragraph review of the Sinshelmer, Grout, Namkoong, Gottlieb, and Latif (2007) dry cleaning article,including an explanation of the common dry cleaning process using perchloroethylene (PCE), problems with PCE,and a review of options to PCE pres..

Passengers and astandard deviation of 4 passengers : Offwego Airlines has a daily flight from Chicago to Las Vegas. On average, 18 ticket holderscancel their reservations at the last minute, so the company intentionally overbooks the flight.Cancellations can be described by a normal distribution with a..

Define operations management as used : Define operations management as used in business during the production process

Numerous theorists discuss cultural concepts : Numerous theorists discuss cultural concepts. Using this information as a basis, discuss the concepts you would want to analyze and evaluate in order to prepare you and other company executives for the upcoming meeting.

Interrelationship between financing and investments : n order to recognize the interrelationship between financing and investments, a firm should use ________ when evaluating an investment.a. the current opportunity cost.b. the most costly source of financing.c. the least costly source of financing.d. t..

What are the unique accounting and measurement issues : why do colleges and universities report some scholarships as revenue deductions and others as expenses? What are some of the guidelines - Does this distort the financial reporting process?

User Account

All Pages