Abstract

Julie Andrews (Julie), Marketing Manager of a medium-sized airline, had been tasked with finding out the extent of overbooking the airline could permit on one of its flights. The young airline’s CEO, Steve Jackson (Steve), wanted to get this right so that the airline would not find itself in the kind of situation United Airlines Limited (UAL) faced in April 2017 in which a passenger was forcibly deplaned, leading to a huge backlash against the airline.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• To understand Binomial Distribution and its practical applications. Also, to understand Normal approximation to the Binomial probability, when n is large and p is small.
• Understanding the concept and application of simulation in business.
• Using Binomial / Normal distribution for simulation.

Keywords

Analytics; Overbooking; Statistics; Binomial Distribution; Normal distribution; Probability; Simulations; Quantitative methods; Predictive analytics; Operations research