9781118041581

Summary 117

number of seats sold must be no greater than the total number of

seats available—that is, cell E9 must be less than or equal to cell E5.

c. Suppose the airline is considering promoting a single “value fare” to

all passengers along the route. Find the optimal single fare using

your spreadsheet’s optimizer. (Hint:Simply modify the optimizer

instructions from part (b) by adding the constraint that the prices in

cells C11 and D11 must be equal.)

ABCDEF

1

2 DUAL AIRFARES Planes 2

3 Seats/Plane 200

4 Cost/Plane 20,000

5 Total Seats 400

6

7 Business Non-Bus. Total

8

9 Number of Seats 200 200 400

10

11 One-way Fare 440 330 —

12

13 Revenue 88,000 66,000 154,000

14 MR 340 280

15

16 MC 100 Total Cost 40,000

17

18 Total Profit 114,000

19

S3. Now suppose the airline in Problem S2 can vary the number of daily

departures.

a. What is its profit-maximizing number of flights, and how many

passengers of each type should it carry? (Hint:The optimal numbers

of passengers, QBand QE, can be found by setting MRBMREMC

per seat. Be sure to translate the $20,000 marginal cost per flight into

the relevant MC per seat.)

b. Confirm your algebraic answer using the spreadsheet you created in

Problem S2. (Hint:The easiest way to find a solution by hand is to

vary the number of passengers of each type to equate MRs and MC;

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