Northam Airlines is trying to decide how to partition a new plane for its Chicago–Detroit route. The plane can seat 200 economy class passengers. A section can be partitioned off for first class seats but each of these seats takes the space of 2 economy class seats. A business class section can also be included, but each of these seats takes as much space as 1.5 economy class seats. The profit on a first class ticket is, however, three times the profit of an economy ticket. A business class ticket has a profit of two times an economy ticket’s profit. Once the plane is partitioned into these seating classes, it cannot be changed. Northam knows, however, that the plane will not always be full in each section. They have decided that three scenarios will occur with about the same frequency: 

(1) weekday morning and evening traffic, 

(2) weekend traffic, and 

(3) weekday midday traffic. Under Scenario 1, they think they can sell as many as 20 first class tickets, 50 business class tickets, and 200 economy tickets. Under Scenario 2, these figures are 10 , 25 , and 175 . Under Scenario 3, they are 5 , 10 , and 150 . You can assume they cannot sell more tickets than seats in each of the sections. (In reality, the company may allow overbooking, but then it faces the problem of passengers with reservations who do not appear for the flight (no-shows). The problem of determining how many passengers to accept is part of the field called yield management or revenue management.

Answer rating: 100% (QA)

Given that there are three scenarios with different frequencies Northam Airlines should partition th... View the full answer