Question: A commuter airline overbooks all of its flights by one
A commuter airline overbooks all of its flights by one passenger ( i. e., the ticket agent will take seven reservations for an airplane that has only six seats). The no-show experience for the past 20 days is shown below:
Using the critical fractile P( d , x) < Cu/( Cu 1 Co), find the maximum implied overbooking opportunity loss Co if the revenue Cu from a passenger is $ 20.
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