An airline is interested in analyzing the pricing of roundtrip airfare for flights between Chicago and Minneapolis. They plan to use Airbus 319 jets with a capacity of 150 seats. The fixed cost to fly the roundtrip flight is $35,000. Daily demand is related to the airfare and is modeled with the following equation: Demand=1900-3.0(airfare). So, the pricing of a flight clearly affects demand.

They are also deciding on the number of flights to schedule, between 1 and 6, per day. This decision clearly limits the number of seats available for sale.

a. (5 points) What are the input variables?

b. (5 points) What are the output variables?

c. (5 points) What are the decision variables?

d. (10 points) Interpret the demand function in terms of the relationship between airfare and demand. Draw a graph of the relationship.

e. (10 points) If the airline decides to schedule two flights per day, what price must they charge to breakeven?

f. Setup a spreadsheet to compute profit.

a. (5 points) In Excel, use the “Define Name” or “Create from Selection” to label cells.

b. (20 points) Spreadsheet creation/design. Note: Revenue depends on the relationship between demand and capacity, i.e., at some point there will be less demand than capacity available.

c. (20 points) Create a two-way table that computes profit for 1 through 7 flights per day for airfare prices of $100 through $700 incremented by $50.

g. Write a brief report using the following sections:

a. (5 points) Describe the purpose of the analysis.

b. (5 points) Describe the analysis and the key variables.

c. (5 points) Summarize your findings.

d. (5 points) What is the best decision?

h. 10 Bonus points for creativity.

Subject | Computer |

Due By (Pacific Time) | 03/19/2014 06:00 pm |

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