Quality Airlines has 125 seats available for reservations for a flight, and sell the seats 250TL...

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Quality Airlines has 125 seats available for reservations for a flight, and sell the seats 250TL for each ticket. Some passengers make reservations but not show up (no show), so airline can accept more than 125 reservations. On those occasions when more than 125 people arrive to take the flight, the airline will find volunteers who are willing to be put on a later flight, but airline pays these people 150TL back. The number of no shows and their probabilities are given in the table below. a) Identify over-ordering (overage) and under-ordering (underage) costs. b) Find the critical ratio. c) Determine how many overbooked reservations should Quality airlines accept. Number of no shows 0 1 2 3 4 5 6 78 Probability 0.05 0.1 0.15 0.15 0.15 0.15 0.1 0.1 0.05 Quality Airlines has 125 seats available for reservations for a flight, and sell the seats 250TL for each ticket. Some passengers make reservations but not show up (no show), so airline can accept more than 125 reservations. On those occasions when more than 125 people arrive to take the flight, the airline will find volunteers who are willing to be put on a later flight, but airline pays these people 150TL back. The number of no shows and their probabilities are given in the table below. a) Identify over-ordering (overage) and under-ordering (underage) costs. b) Find the critical ratio. c) Determine how many overbooked reservations should Quality airlines accept. Number of no shows 0 1 2 3 4 5 6 78 Probability 0.05 0.1 0.15 0.15 0.15 0.15 0.1 0.1 0.05

Answer rating: 100% (QA)

a Overordering overage cost This refers to the cost incurred when the airline accepts more reservations than the available seats resulting in the need ... View the full answer