Question

Baggage fees. An airline charges the following baggage fees: $25 for the first bag and $35 for the second. Suppose 54% of passengers have no checked luggage, 34% have one piece of checked luggage and 12% have two pieces. We suppose a negligible portion of people check more than two bags. (a) Build a probability model, compute the average revenue per passenger, and compute the corresponding standard deviation. (b) About how much revenue should the airline expect for a flight of 120 passengers

Answer 1

Answer:

a) on average 15.70 dollar per person on baggage fees

b) a 120 passangers flight will generate 1,884 dollars on baggage fees

Explanation:

We multiply the probability by the outcome withthe bjective to create a weighted average based on probability of success:

P(x)                      revenue

no bag: 54%      $   0            0

a bag:    34%      $ 25           8.50

two bag: 12%     $  60          7.2    

   average revenue            15.70

Now, for the fligh of 120 passangers we use this estimation:

120 x 15.70 = $ 1,884