JetRed Airways flies several daily flights from Philadelphia to Chicago.  Based on historical data, the flight on Wednesday evening before...

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JetRed Airways flies several daily flights from Philadelphia to Chicago.  Based on historical data, the flight on Wednesday evening before Thanksgiving is always sold-out.  However, there are usually no-shows so the airline decides to improve revenues by overbooking.  The no-shows are Poisson-distributed with mean 8 and the airline estimates that the cost of bumping a passenger is about 10 times more than ticket price.How many seats should JetRed overbook?

 

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    • 11 years ago
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