Reference no: EM132303547

The Royal Hotel has 200 rooms. The manager has to determine the number of reservations to accept for each day. She actually will consider accepting more than 200 reservations because she is aware that some people with reservations will cancel at the last minute or merely not show up. The number of no shows and cancellations for any one day is random. The manager assumes that random value will follow a normal distribution with a mean of 15 and a standard deviation of 7. Each room in the hotel can be booked at a rate of $250 a night. If a customer cancels or does not show up the hotel does not receive the $250. On the other hand, if a customer with a reservation shows up and no room is available the manager will have to arrange for a similar room at another hotel. The Royal Hotel will still receive the agreed upon $250 but will have to pay $300 for the room in the other hotel. Use simulation analysis to determine the idea number of reservations the manager should accept in order to maximize the revenue less the cost occurred when more than 200 customers with reservations show up.