Question: Continuing from the previous question ( airline booking ) , the airline likes your solution to the previous question and they are planning to offer
Continuing from the previous question airline booking the airline likes your solution to the previous question and they are planning to offer that number of seats at the leisure rate, but they are considering overbooking for their business travelers. Assume the airline sells the previously determined number of seats to leisure travelers far in advance of the flight and these seats are sold final sale to the leisure travelers.
However, business travelers can cancel purchased seats and receive a full refund. On average of business travelers cancel and the coefficient of variation standard deviation mean of cancellations is Remember that business travelers pay $ per ticket. If the total variable cost per seat is $ and the cost of backup capacity is $ how many seats should the airline overbook business travelers on each flight?
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