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Homework_5_DecisionTree&RevenueMgtTTh - estimates...

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311 Operations Management Spring 2009 Homework 5: Decision Tree & Revenue Management Due 04/02/2007 1. (25 pts)Problem 9, page 138 in the text book 2. (25 pts, 15 pts for part a and 10 pts for part b)JJ is selling exclusive hand-made necklace on Ebay. It is estimated that the demand next month is a function of price as follows: p p D 2 100 ) ( = a . Which price maximize JJ’s revenue and what is the max revenue? b. Suppose JJ has only 20 necklaces available to sell next month, what price maximize the revenue and what is the max revenue next month? 3. (25 pts, 10 pts for part a, 15 pts for part b)A flight has 61 seats left. The full-fare tickets are priced at $800 and the discount tickets are priced at $300. The airline
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Unformatted text preview: estimates that the demand of full fare customers is between 31 and 80, all numbers equally likely. a. To maximize the expected revenue, should the airline sell one more discount ticket? b. How many seats should we reserve for the full fare class? 4. (25 pts) A flight from LA to San Jose has 200 seats. The airline knows that the number of cancellation will vary between 1 and 4, all numbers equally likely. The fare price is $200 and the estimated denied boarding cost is $500. How many seats should the airline sell for this flight in order to maximize the expected revenue?...
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