Answer:
The average revenue per passenger is about $13.85
μ = $13.85
The corresponding standard deviation is $14.51
σ = $14.51
The airline should expect revenue of $1,662 with a standard deviation of $14.51 for a flight of 120 passengers.
Expected revenue = $1,662 ± 14.51
Explanation:
An airline charges the following baggage fees:
$25 for the first bag and $35 for the second
Suppose 51% of passengers have no checked luggage,
P(0) = 0.51
33% have one piece of checked luggage and 16% have two pieces.
P(1) = 0.33
P(2) = 0.16
a. Build a probability model, compute the average revenue per passenger, and compute the corresponding standard deviation.
The average revenue per passenger is given by
μ = 0×P(0) + 25×P(1) + 35×P(2)
μ = 0×0.51 + 25×0.33 + 35×0.16
μ = 0 + 8.25 + 5.6
μ = $13.85
Therefore, the average revenue per passenger is about $13.85
The corresponding standard deviation is given by
σ = √σ²
Where σ² is the variance and is given by
σ² = (0 - 13.85)²×0.51 + (25 - 13.85)²×0.33 + (35 - 13.85)²×0.16
σ² = 97.83 + 41.03 + 71.57
σ² = 210.43
So,
σ = √210.43
σ = $14.51
Therefore, the corresponding standard deviation is $14.51
b. About how much revenue should the airline expect for a flight of 120 passengers? With what standard deviation?
For 120 passengers,
Expected revenue = 120×$13.85
Expected revenue = $1,662 ± 14.51
Therefore, the airline should expect revenue of $1,662 with a standard deviation of $14.51 for a flight of 120 passengers.