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August 14th, 2017 
admin 1. A flight is almost fully booked and it has only 4 seats left. The full-fare tickets are priced at $600 and the discount tickets are priced at $400. The airline has 3 analysts—Steve, John and Mary.
a) Steve estimates that the demand of full fare customers is distributed according to the following table.
| #full fare customers | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
| Probability | 0.05 | 0.05 | 0.1 | 0.15 | 0.2 | 0.15 | 0.1 | 0.1 | 0.05 | 0.05 |
| P(D>=x) | 1 | 0.95 | 0.9 | 0.80 | 0.65 | 0.45 | 0.30 | 0.20 | 0.10 | 0.05 |
i. (5 points) To maximize expected revenue, should the airline sell one more discount ticket?
ii. (5 points) How many seats should the airline reserve for the full fare class?
b) John estimates demand for full-fare customers is distributed uniformly between 2 and 9.
i. (5 points) To maximize expected revenue, should the airline sell one more discount ticket?
ii. (5 points) How many seats should the airline reserve for the full fare class?
c) Mary estimates demand for full-fare customers is distributed normally with a mean of 6 and standard deviation of 3.
i. (5 points) To maximize expected revenue, should the airline sell one more discount ticket?
ii. (5 points) How many seats should the airline reserve for the full fare class?
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