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Business, 13.10.2020 03:01 djcloverman3593

On a given MCO-ATL flight, there are 200 seats and each seat is sold at an average ticket price of 300. It has been observed that on most days in the past month, the flight rarely approaches 100% occupancy since there are passenger no-shows and hence, the airline decides to overbook flights. The airline manager assigned the task of determining the number of seats to overbook on this flight estimates:. (a) no-shows using historical information; and (b) service denial rate the airline should offer if on a specific day a customer is denied a seat due to overbookings. However, she encounters an interesting conundrum: the distribution of no-shows changes depending upon the service denial rate (essentially the mean no-shows is lower if the service denial rate offered in higher).

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