a. Using revenue management, determine how many seats should be reserved for premium ticket holders.
b. Considering your answer to part (a) and the possible outcomes listed above, how much total revenue (i.e., regular and premium) can be expected from ticket sales?
c. The administration is unsure about Frank’s plan. The VP of Finance thinks an expected value of the number of premium seats would produce better results. How would the number of premium seats change using expected value? Considering the possible outcomes, which approach yields the most potential revenue? (See Supplement 1 for an explanation of expected value.)
Blokie State’s football program has risen to the ranks of the elite with postseason bowl games in each of the past 10 years, including a national championship game. The Blokes (as the fans are called) fill the stadium each game. Season tickets are increasingly difficult to find. In responseto the outstanding fan support, Blokie State has decided to use its bowl revenues to expand the stadium to 75,000 seats.