Answered: What is the optimal protection level…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Dallas One Airline has started selling the air tickets for the fight 161 from Dallas to Toronto on June 30. There are 250 economy class seats on board. The airline sells some economy class seats at a discount price of $440 in advance and reserves a number of seats to sell at the full price of $770 Suppose that Dallas One Airline can always sell at discount tickets and the demand for full-price tickets is normally distributed with a mean of 100 and a standard deviation of 25

What is the optimal protection level for the airline? Choose the closest number.

a. 89

b. 96

c. 100

d. 104

e. 112

Features Features Normal distribution is characterized by two parameters, mean (µ) and standard deviation (σ). When graphed, the mean represents the center of the bell curve and the graph is perfectly symmetric about the center. The mean, median, and mode are all equal for a normal distribution. The standard deviation measures the data's spread from the center. The higher the standard deviation, the more the data is spread out and the flatter the bell curve looks. Variance is another commonly used measure of the spread of the distribution and is equal to the square of the standard deviation.

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