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

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Business

Desirae Griffith

4 September, 05:57

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

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Shannon Barnett · Answer 1

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