Important: Please read carefully....... You are allowed to use technology for the following Problems (Problem #9 and Problem #10). Most probably, you have to use technology or you may have to spend hours, to carry out the necessary calculations by hand. Nonetheless, you should clearly delineate and explain your logic and reasoning on how to tackle problems #9, and #10.
9. (8 points) The Undesirable Air Lines (UAL???) is notorious for its cost-cutting substandard customer service. Consequently, only 85% of the ticket holders will show up for a flight. The Air Lines workhorse, the Boring 878, has 234 seats. UAL, of course, will make extra money by overbooking. However, they have to worry about the FAA fines, and they have to keep a safety margin, say, that there is at least 95% probability that they can accommodate all those who show up for the Boring 878 flight. How many seats can they actually sell in this case?
10. (8 points) It is an open secret that airlines overbook flights, but I have just learned recently that bookstores underbook (I might have invented this new term.) textbooks..........
To make a long story short, our UMD designated virtual bookstore, MBS Direct, routinely, as a matter of business practice, orders less textbooks than the amount requested by UMUC's Registrar's Office. That is what I have figured out....... Simply put, MBS Direct has to "eat" the books if they are not sold. Do you want to eat the books? You may want to cook the books before you eat them! Oops, I hope there is no account major in this class?
OK, let us cut to the chase..... MBS Direct believes that only 85% of our registered students will stay registered in a class long enough to purchase the required textbook. Let's pick on our STAT 200 students. According to the Registrar's Office, we have 600 students enrolled in STAT 200 this fall 2019.
Suppose you are the CEO of MBS Direct, and you want to perform a probability analysis. What would be the number of STAT 200 textbook bundles you would order so that you stay below 5% probability of having to back-order from Pearson Custom Publishing? (Note: Our Provost would be very angry when she hears that textbook bundles have to be back-ordered. In any case, by next fall, we will no longer need the service of MBS Direct as we are moving 100% to free eResources. Auf Wiedersehen, MBS Direct......)
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