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We discuss a single-period inventory system with a general S-shaped utility function and exponential demand. It is shown that there exists a state-dependent order-up-to policy to be optimal. Behaviors of optimal policy are illustrated by a numerical example.

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Ahstract-We discuss overbooking problem in airline in dustry for utility-maximization. Optimization problems are formulated with consideration of risk-neutral, lose-aversion, and prospect theory preferences of managers. A numerical study follows and provides managerial insights.

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