QAM: ASSIGNMENT - II

Due on or before: 11 pm on May 14, 2019

1. Refer to “overbooking by airlines” case circulated and discussed in class with the following
modifications and additions:

a. Revenue from each ticket is Rs. 5000 + 50 *x , where x is the last 2 digits of your
PGPEM roll no.
b. Marginal (additional) cost from each additional passenger is 100 Rs.
c. Cost for overbooking (per extra booking made) is a y [ a random number that you
generate /simulate from a Normal distribution with mean 12000 and sd = 1000]
d. Capacity of flight = c = 150 + x (where x is as defined already)

Determine how many seats you should overbook, based on objective principle. [Hint: calculate
expected profit under various alternatives, and then …]

2. Solve
(i) two problems from the textbook exercises in chapter 7: pages 314-315, 330-331, 333-334
(ii) three problems from the textbook exercises in chapter 8: pages 341-342, 347-348, 350-351, 356-357,
374, 380-381, 388, 390-395
(iii) one problem from the textbook page 417-418
(iv) two problems from the textbook page 435-440

Rules for submission: Combine all work into single file (word/pdf). Incorporate necessary calculation
from excel (especially from Q1) in that document Your need to submit the file via moodle, in the relevant
link, in assignment submission “Exercise 1”). The files should be named “ROLLNO_CE2.ext” where
“ROLLNO” is your PGPEM roll number and “.ext” would reflect the relevant software you are using.

E-mail communications, submissions, and/or submissions after the deadline would not be considered
under any circumstances. You may note that some last minute problems in moodle are expected and
would not be considered as valid excuse for delayed submission.

Confidential C