South central airlines (sca) operates a commuter flight between atlanta and charlotte. the regional jet holds 50 passengers and
currently sca books only up to 50 reservations. past data shows that sca always sells all 50 reservations but that, on average, two passen- gers do not show up. as a result, with 50 reservations, the flight is often being flown with empty seats. to capture additional profit, sca is considering an overbooking strategy in which they would accept 52 reservations even though the airplane holds only 50 passen- gers. sca believes that it will be able to always book all 52 reservations. the probability distribution for the number of passengers showing up when 52 reservations are accepted is estimated as follows:
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As a seller we would receive $1,041.25
<u>Solution:</u>
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