United Airlines flies a 50-passenger fight each day to Orlando. A non-refundable

Question

United Airlines flies a 50-passenger fight each day to Orlando. A non-refundable one-way fare with a reservation costs $250. The daily demand for this flight is normally distributed with a mean of 48 and a standard deviation of 8. No shows are uniformly distributed between 0 and 5 passengers. Untied would like to investigate overbooking 2, 3, 4, 5, 6, or 7 passengers. If there are not enough seats for all the passengers at the gate, United refunds their fare and also provides a $300 voucher good on any other airline. The fixed cost for each flight is $9000, regardless of the number of passengers.

Simulate 25 days of operation to calculate the average daily profit. Replicate this calculation 100 times to recommend an overbooking level.

Please using excel simulation to answer it. Very much appreciate the help

Explanation / Answer

After performing simulation, maximum revenue comes for overbooking 3 passengers. Table is attached

Day Daily Demand No show Actual shown Adding overbook Excess Revenue Overbook Total Revenue 1 51 0 51 58 -8 10100 Changing 7 293400 2 46 0 46 53 -3 11600 3 48 0 48 55 -5 11000 4 51 0 51 58 -8 10100 Results Revenue 5 47 1 46 53 -3 11600 2 292950 6 42 1 41 48 0 12000 3 298600 7 46 1 45 52 -2 11900 4 292950 8 46 1 45 52 -2 11900 5 296200 9 47 2 45 52 -2 11900 6 296850 10 48 2 46 53 -3 11600 7 292500 11 48 2 46 53 -3 11600 12 45 2 43 50 0 12500 13 46 3 43 50 0 12500 14 50 3 47 54 -4 11300 15 48 3 45 52 -2 11900 16 48 3 45 52 -2 11900 17 49 4 45 52 -2 11900 18 46 4 42 49 0 12250 19 47 4 43 50 0 12500 20 45 4 41 48 0 12000 21 45 5 40 47 0 11750 22 46 5 41 48 0 12000 23 48 5 43 50 0 12500 24 44 5 39 46 0 11500 25 47 1 46 53 -3 11600

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