The Harriet Hotel in downtown Boston has 100 rooms that rent for $150 per night. It costs the hotel $30 per room in variable costs

In Crystal Ball

The Harriet Hotel in downtown Boston has 100 rooms that rent for $150 per night. It costs the hotel $30 per room in variable costs (cleaning, bathroom items, etc.) each night a room is occupied. For each reservation accepted, there is a 5% chance that the guest will not arrive. If the hotel overbooks, it costs $200 to compensate guests whose reservations cannot be honored.

How many reservations should the hotel accept if it wants to maximize the average daily profit?

Solutions

Expert Solution

orchestra answered 1 year ago

Next > < Previous

Related Solutions

A small hotel has 50 rooms that rent for $105 per night and cost $45 to...

A small hotel has 50 rooms that rent for $105 per night and cost $45 to clean and prepare each night they are used. All rentals are by reservation and there is a 10% chance that an individual reservation will not show up. If a customer arrives at the hotel with a reservation and no room is available due to overbooking, the hotel will refund the cost of the room and pay $150 to put the customer up at another...

A hotel has 200 rooms and charges two different room rates: rL =$100/ night for...

A hotel has 200 rooms and charges two different room rates: rL = $100/ night for discount fares and rH = $500/ night targeting business travelers. Demand for the discounted rooms exceeds the 200 room hotel capacity.A. What is the Co (overage cost), in $?B.What is the Cu, underage cost, in $?C. What is the critical ratio (round to two digits)?D. Assuming the demand for high fare rooms has a Normal distribution with mean =50 and standard deviation =15, how...

A 600-room hotel can rent every one of its rooms at $90 per room. For each...

A 600-room hotel can rent every one of its rooms at $90 per room. For each $1 increase in rent, 3 fewer rooms are rented. Each rented room costs the hotel $10 to service per day. How much should the hotel charge for each room to maximize its daily profit? What is the maximum daily profit?

Glitz hotel, a 500-room hotel, rents hotel rooms for $120/night. At the current sales level of...

Glitz hotel, a 500-room hotel, rents hotel rooms for $120/night. At the current sales level of 400 rooms per night, Glitz currently makes a profit of $30/room: Per room Sales $120 Costs 90 Profit 30 It costs Glitz $90/night to maintain a room ($60 in depreciation, $25 in variable maintenance and $5 in fixed booking costs). Glitz has been approached by Conventions2000.com to purchase a block of 300 rooms for $80/room per night. If this special...

Sector hotel, a 500-room hotel, rents hotel rooms for $120/night. At the current sales level of...

Sector hotel, a 500-room hotel, rents hotel rooms for $120/night. At the current sales level of 400 rooms per night, Glitz currently makes a profit of $30/room: Per room Sales $120 Costs 90 Profit 30 It costs Sector $90/night to maintain a room ($60 in depreciation, $25 in variable maintenance and $5 in fixed booking costs). Sector has been approached by Conventions2000.com to purchase a block of 300 rooms for $80/room per night. If this special...

The Tired Traveler Motel rents rooms for $50 per night. The variable cost per room rental...

The Tired Traveler Motel rents rooms for $50 per night. The variable cost per room rental is $10. The company incurs $300,000 of fixed costs per year. The company expects to rent 10,000 rooms in the coming year. a. Based on these data, prepare a static budget for the coming year. b. Holding all other factors constant, how would net income differ from the static budget if sales price was 10 percent lower than expected? c. Holding all other factors...

Avila Hotel has 300 rooms and charges $120 per room. The hotel estimates that the demand...

Avila Hotel has 300 rooms and charges $120 per room. The hotel estimates that the demand for the rooms follows a uniform distribution between 270 and 330 each day. Reservations may be canceled by 6pm with no penalty. The hotel estimates that 3% of the reservations are canceled by 6pm. Hence, the hotel allows overbooking by 20 room (the hotel allows up to 320 customers to make reservation). When more customers arrive than can be handled (e.g., more than 300...

A hotel has 100 rooms. On any given night, it takes up to 105 reservations, because...

A hotel has 100 rooms. On any given night, it takes up to 105 reservations, because of the possibility of no-shows. Past records indicate that the number of daily reservations is uniformly distributed over the range 96-105. That is, each integer number in this range has a probability of 10%, of showing up. The no-shows are represented by the distribution in the table below. Number of No-Shows Probability 0 15% 1 20% 2 35% 3 15% 4 15% Based on...

The city of Seattle sells an average of 30,000 hotel rooms per night. Currently, those rooms...

The city of Seattle sells an average of 30,000 hotel rooms per night. Currently, those rooms have an average tax of $90. The city proposed an additional tax of $10 per room to help finance a stadium. Economists believe that without the tax, the city would average an extra 4000 rooms per night due to the new stadium. But with the tax, the number of rooms sold would fall to 27,000 even with the stadium. Based on these numbers, would...

A hotel in Saint Augustine books an average of 50 rooms per night. There is a...

A hotel in Saint Augustine books an average of 50 rooms per night. There is a standard deviation of 10 rooms per night. What is the probability that... a) more than 50 rooms are booked on a given night? b) between 50 and 60 rooms are booked on a given night? c) 60 rooms or less are booked on a given night? d) between 30 and 70 rooms are booked on a given night? e) less than 40...

Subjects