Next week, Eagle Air has a regularly scheduled flight from New York to Dallas that will be
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Question:
Next week, Eagle Air has a regularly scheduled flight from New York to Dallas that will be booked
to capacity. Based on prior experience, the airline expects customers normally distributed with
a standard deviation of to cancel their reservations too late to resell the seat or to fail to show
up for the flight we will assume that the tickets are refundable so that noshows represent lost
revenue Revenue from a ticket on the flight is $ If more customers show up than Eagle Air
has seats, the policy is to put the customer on the next available flight without bumping any other
passengers and to give them a free roundtrip ticket that will cost Eagle Air an average of $ in
lost revenue at a later date. Should Eagle Air overbook the flight? By how many seats?
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