A flight has 50 seats left to sell. Full-fare tickets are priced at $300 and discount tickets
Question:
A flight has 50 seats left to sell. Full-fare tickets are priced at $300 and discount tickets are priced at $200. The airline estimates that the demand of full-fare customers is uniformly distributed between 20 and 69.
a. To maximize the expected revenue, should the airline sell one more discount ticket? Answer is that they should sell one more discount ticket.
b. How many seats should we reserve for the $300 price? The answer is that we should reserve 36 seats.
c. If the airline receives and accepts an unexpected group order for 20 seats, should the airline sell one more discount ticket? The answer is the airline shouldn't sell any more discount tickets.
d. Will your answer change if the full-fare tickets are priced at $360 and the discount tickets are priced at $240? The answer is will not change because the ratio of prices 300/200 = 360/240 remains the same.
I am confused about what the formulas are to solve this problem. Please explain how to solve this problem thoroughly.
Introduction to Operations Research
ISBN: 978-1259162985
10th edition
Authors: Frederick S. Hillier, Gerald J. Lieberman