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In: Operations Management

Round Tree Manor is a hotel that provides two types of rooms with three rental classes:...

Round Tree Manor is a hotel that provides two types of rooms with three rental classes: Super Saver, Deluxe, and Business. The profit per night for each type of room and rental class is as follows:

Rental Class

Room Super Saver Deluxe Business

Type I $32 $43 —

Type II $17 $35 $39

Type I rooms do not have wireless Internet access and are not available for the Business rental class.

Round Tree's management makes a forecast of the demand by rental class for each night in the future. A linear programming model developed to maximize profit is used to determine how many reservations to accept for each rental class. The demand forecast for a particular night is 120 rentals in the Super Saver class, 70 rentals in the Deluxe class, and 55 rentals in the Business class. Round Tree has 105 Type I rooms and 120 Type II rooms.

Use linear programming to determine how many reservations to accept in each rental class and how the reservations should be allocated to room types.

Variable# of reservations

Supersaver rentals allocated to room type I ?

Supersaver rentals allocated to room type II ?

Deluxe rentals allocated to room type I ?

Deluxe rentals allocated to room type II ?

Business rentals allocated to room type II ?

Is the demand by any rental class not satisfied?
Explain.
How many reservations can be accommodated in each rental class?

Rental Class# of reservations

Supersaver ?

Deluxe ?

Business ?

Management is considering offering a free breakfast to anyone upgrading from a Super Saver reservation to Deluxe class. If the cost of the breakfast to Round Tree is $5, should this incentive be offered?

With a little work, an unused office area could be converted to a rental room. If the conversion cost is the same for both types of rooms, would you recommend converting the office to a Type I or a Type II room?

Why?

Could the linear programming model be modified to plan for the allocation of rental demand for the next night?

What information would be needed and how would the model change?

Solutions

Expert Solution

Supersaver rentals allocated to room type I =100

Supersaver rentals allocated to room type II =0

Deluxe rentals allocated to room type I = 5

Deluxe rentals allocated to room type II =65

Business rentals allocated to room type II =55

>>>

Demand of Super saver class is not satisfied

>>>

Reservations made in each rental class

Supersaver = 100

Deluxe =70

Business = 55

>>>

Shadow price deluxe type is $11

Shadow price >$5.

Therefore, up gradation must be done

>>>

Shadow price of type I = $32

Shadow price of type II = $24

Shadow price is higher for type I room. Therefore, type I room is recommended

>>>>

Further information required is

>> On an average how many days a person stays in each type of room

>> Demand of various rooms over next few days

keosha answered 1 year ago

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