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More Profit, Less Complaint
∼
Control number 490
More Profit, Less Complaint
Xia Yunni Zhao changing Wei Li
Advisor Yang Xiaofan
Summary
The present paper aims at providing the optimal overbooking strategy for the
Chief-Executive-Officer (CEO) of an aviation corporation. In more detail, its aim is to determine
the number of tickets which are overbooked to achieve the maximum possible economic profit
while taking various (economic and social) factors into consideration. First of all, the mutual
relationship among the elements such as profit, ticket-price, number of passengers, possibility of
booking-and-arriving, and the maximum number of tickets which are permissible to reserve, is
revealed. Based on this, three typical mathematical models are proposed, which are exposed one
after another below.
The first model, which is the simplest one, aims simply at maximizing the single-airliner
profit rate for the single-price situation. Considering the number of passengers as a random
variable, this model makes use of the average profit (i.e., mathematical expectation) as the
measure of the profit rate. Based on this model, we discuss three typical strategies of how to pay
the passengers who have booked a specific airliner but have to give up the right for taking that
airliner due to the limited transportation capacity of the airplane, respectively.
Alth
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