A flight from Los Angeles to Boston has 200 seats. The airline knows that the number of cancellations will vary according to the following table.

A flight from Los Angeles to Boston has 200 seats. The airline knows that the number of cancellations will vary according to the following table. As a standard practice, it overbooks the flight in anticipation of no-show passengers. The fare for this flight is $600. No-show passengers pay the full fare and do not receive any refund.

If a customer with a booked ticket arrives and there is no seat available, then the airline incurs an average cost of $800 (lodging cost for the customer until the next available flight). How many seats should the airline sell for this flight in order to maximize the expected revenue?

Cancellation