Question

In: Operations Management

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 many rooms should we protect for high paying customers? (Remember, use whole numbers only)

E. Where should we set our booking limit? (Remember to use whole numbers only)

Solutions

Expert Solution

A. Co = $ 100

B. Cu = $ 400

C. Critical Ratio = 0.80

D. No of Rooms for high paying customers = 63

E.Limits

No of Rooms for high paying customers = 63

No of Rooms for low paying customers = 137

keosha answered 2 years ago
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