SCM 366
Revenue Management Assignment II
II. San Francisco Express Airlines, SaFE for short,flies from PHL to SFO. On a Thursday evening flight, the number oflast-minute no-shows and cancellations is Poisson distributed withmean 7.5. SaFE has an unlimited number of low fare travelers whopay $300. The cost of bumping such a passenger is estimated to be$350 (due lost goodwill as well as the cost of routing theiritinerary through other airlines).  SaFE offers this lowfare because it also comes with a cancellation/rebooking fee of$150 – if a customer doesn’t show up for the flight or cancels herreservation, she must pay $150 to use the ticket on anotherflight.
To maximize revenue from this flight, how many seatsshould the airline overbook?
Customers are more reliable on the Friday eveningflight. On that flight, the average number of no-shows andcancellations is Poisson with mean 4.5. Suppose SaFE overbooks thatflight by 6 seats. What is the probability that at least 1passenger will be bumped from this flight?
PLEASE ANSWER IT IN EXCEL SHEET WITHEXPLANATION
