Business, 25.06.2020 02:01 ccollinsphotogr3177
Suppose that past experience shows that about 12% of passengers who are scheduled to take a particular flight fail to show up. For this reason, airlines sometimes overbook flights, selling more tickets than they have seats, with the expectation that they will have some no shows.
Suppose an airline uses a small jet with seating for 30 passengers on a regional route and assume that passengers are independent of each other in whether they show up for the flight. Suppose that the airline consistently sells 32 tickets for every one of these flights.
Required:
a. What is the probability of having overbooked flight?
b. What is the expected amount of cost to compensate the overbooked flight?
Answers: 3
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