How many seats should super discount overbook flight


Next week, Super Discount Airlines has a flight from New York to to Los Angeles that ill be booked to capacity. The airline knows from past history that an average of 25 customers (with a standard deviation of 15) cancel their reservation or do not show for the flight. Revenue from a ticket on the flight is $125. If the flight is overbooked, the airline has a policy of getting the customer on the next available flight and giving the person a free round trip ticket on a future flight. The cost of this free round trip ticket avergaes $250. Super Discount considers the cost of flying the plane from New York to Los Angeles a sunk cost. By how many seats should Super Discount overbook the flight?

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