Reference no: EM132950314

Question - Fire Air focuses business on high-paying McKinsey consultants, but to fill planes, it also carries the general public. It is flying a 150-seat jet from Singapore to China and the consultant demand is normally distributed with mean 60 and standard deviation 10. Consultants pay $1,100 per ticket, while the general public pays $350. Of course, the general public must book a flight several weeks ahead of time, while consultants book flights at the last minute.

a. How many seats should Fire Air open up for the general public?

b. Assuming we open up 40 seats for the general public and there are zero no-shows, how full (in percentage) will the plane be?

c. Flight time from Singapore to China is random and generally fits a normal distribution with a mean of 5 hours and a standard deviation of 1 hour. The cost to the airline for the entire crew (attendants, pilots, etc.) is approximately $25 per minute of scheduled flight time (as opposed to actual flight time), and assume that the crew is paid based only on scheduled flight time, not actual time. On the other hand, customers face some annoyance and other costs when there is a late flight. Therefore, Fire Air estimates that the cost associated with a late flight is $60 per minute in excess of scheduled flight time. What is the optimal scheduled flight time that Fire Air should list in the schedule? How long is the average delay?