Providing a bumped passenger

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Reference no: EM131034701

Atlanta Airlines routinely overbooks its flights from Atlanta to Boston. Overbooking discounted seats can be expensive because providing a bumped passenger with a last minute flight on a competing carrier can cost $450. A 120-passenger jet costs about $6000 to operate from Atlanta to Boston. The average ticket price is $300.

a. Given the frequency of no-shows in the following table, how many seats should be overbooked? (Note: Pay attention to the calculation of the Overbooking Expected loss and Empty seat loss)

b. Atlanta Air offers special rates on its Atlanta/Boston route for the holidays. How would a $200 ticket price affect the number of seats overbooked?

No-Shows	1	2	3	4	5	6
Frequency	15	10	10	5	5	5

Reference no: EM131034701

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