1,000 trials and native Excel functionality.) Allegiant Airlines is considering an overbooking policy for one of its flights. The airplane has 50 seats, but Allegiant is considering accepting more reservations than seats because sometimes passengers do not show up for their flights, resulting in empty seats. The PassengerAppearance

MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
icon
Related questions
Question

(All answers were generated using 1,000 trials and native Excel functionality.)

Allegiant Airlines is considering an overbooking policy for one of its flights. The airplane has 50 seats, but Allegiant is considering accepting more reservations than seats because sometimes passengers do not show up for their flights, resulting in empty seats. The PassengerAppearance worksheet in the file Overbooking contains data on 1,000 passengers showing whether or not they showed up for their respective flights.

Click on the datafile logo to reference the data.

 

In addition, Allegiant has conducted a field experiment to gauge the demand for reservations for the current flight. During this experiment, they did not limit the number of reservations for the flight to observe the uncensored demand. The following table summarizes the result of the field experiment.

 

No. of Reservations Demanded Probability
48 0.05
49 0.05
50 0.15
51 0.30
52 0.25
53 0.10
54 0.10

 

Allegiant receives a marginal profit of $100 for each passenger who books a reservation (regardless of whether they show up). Allegiant incurs a rebooking cost of $300 for each passenger who books a reservation, but is denied seating due to a full airplane; this cost results from rescheduling the passenger and any loss of goodwill.

To control its rebooking costs, Allegiant wants to set a limit on the number of reservations it will accept. Evaluate Allegiant’s average net profit for reservation limits of 50, 52, and 54, respectively.

Round your answers to a whole dollar amount.

 

Reservation Limit Average Net Profit
50
52
54

 

Based on the 95% confidence intervals for average net profit, which reservation limit do you recommend? Round your answers to a whole dollar amount.

We are 95% confident that Allegiant Airlines can achieve a net profit between $  and $  by limiting the number of reservations to  .

Expert Solution
steps

Step by step

Solved in 4 steps with 4 images

Blurred answer
Similar questions
Recommended textbooks for you
MATLAB: An Introduction with Applications
MATLAB: An Introduction with Applications
Statistics
ISBN:
9781119256830
Author:
Amos Gilat
Publisher:
John Wiley & Sons Inc
Probability and Statistics for Engineering and th…
Probability and Statistics for Engineering and th…
Statistics
ISBN:
9781305251809
Author:
Jay L. Devore
Publisher:
Cengage Learning
Statistics for The Behavioral Sciences (MindTap C…
Statistics for The Behavioral Sciences (MindTap C…
Statistics
ISBN:
9781305504912
Author:
Frederick J Gravetter, Larry B. Wallnau
Publisher:
Cengage Learning
Elementary Statistics: Picturing the World (7th E…
Elementary Statistics: Picturing the World (7th E…
Statistics
ISBN:
9780134683416
Author:
Ron Larson, Betsy Farber
Publisher:
PEARSON
The Basic Practice of Statistics
The Basic Practice of Statistics
Statistics
ISBN:
9781319042578
Author:
David S. Moore, William I. Notz, Michael A. Fligner
Publisher:
W. H. Freeman
Introduction to the Practice of Statistics
Introduction to the Practice of Statistics
Statistics
ISBN:
9781319013387
Author:
David S. Moore, George P. McCabe, Bruce A. Craig
Publisher:
W. H. Freeman