Maximazing the expected profit


Offwego Airlines has a daily flight from Chicago to Las Vegas. On average, 18 holders cancel their reservation at the last minute, so the company intentionally overbooks the flight. Cancellations can be described by a normal distribution with a mean of 18 passengers and a standard deviation of 4 passengers. Profit per passenger is $99. If a passengers arrives but cannot board due to overbooking, the company policy is to provide compensation of $200 in cash. How many tickets should be overbooked to maximize expected profit?

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Operation Management: Maximazing the expected profit
Reference No:- TGS058642

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