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A newly created NorthEast Airways (NE) flight from Austin to Boston has 300 seats. The high fare on the flight is $800 and the restricted/low fare is $300. There is ample demand for the low fare class but high fare demand is random. Further, those customers who buy low fares buy their tickets well in advance before high fare customers. Assume the demand for the high fare is normally distributed with mean 120 and standard deviation of 50.

Mr. Wright is in charge of the flight booking operations and decides to set a protection level for the high fare. What is the optimal protection level for the high fare?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M92576000

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