Question

In: Operations Management

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 hotel. The hotel’s current policy is to stop accepting reservations reaches the overbooking limit of 56 reservations.

a. Develop a simulation model to evaluate the hotel’s total profit and number of customers turned away when it receives the maximum number of reservations under the current policy.

b. Describe your estimate of the distribution of total profit?

c. What is your estimate of the mean total profit?

d. What is your estimate of the mean number of customers turned away?

Please Solve in Excel

Solutions

Expert Solution

a)

Simulation model is following:

EXCEL FORMULA:

Note that rows from 16 to 60 of Excel are hidden to fit on screen

After setting up the simulation model, on the Excel toolbar ribbon , go to Add-in data tab,

Click on MCSim  (MCSim is an Add-in for Monte Carlo Simulation, if it is not installed, then it needs to be installed)

Enter Simulation parameters as shown below:

Click on Proceed

-

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b)

Estimate of distribution of total profit :

Average 3396.075
SD 373.8752
Max 3990.000
Min 2100.000

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c)

Estimate of mean total profit = 3396.075

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d)

Estimate of mean number of customers turned away = 1.049

keosha answered 1 year ago
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