You have been assigned to manage booking levels for Delta Airlines. Flight from Seattle to Dallas has been the focus of attention for revenue management due to low utilization of the available seats. This flight is served by a Boeing 737 with a capacity of 150 seats in the Economy class. The economy full fare on this flight is $800. For Flight scheduled on April 15, you have already accepted 100 reservations so far. No discount fares are being offered. Based on the past history of bookings on this flight, you expect the additional demand for this flight for full-fare economy seats to be Uniformly distributed between 1 and 100 reservations. Assume that all passengers who make reservations on this flight will show up, and hence you should not overbook this flight.
You have received a message from Priceline indicating that a group of students are willing to offer $360 per seat for a group of at least 20 seats, and the group is willing to buy up to 50 seats at this price. Should you accept this offer? If so, how many seats are you willing to give to this group? If not, how much will the students need to offer to obtain a reservation for at least 20 seats?