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You are the manager at an Inn and Suites. Based on market research, you have divided up your customers into two categories: Early bookers or budget travelers and late bookers or business travelers. Research shows that you can charge the budget travelers a rate of $150 per room and the business travelers a rate of $250. Given that the demand from budget travelers is considerably large (you can always find budget travelers to offer the rooms to, but not in the last minute, i.e., rooms left unsold after being reserved for business customers remain unsold) and the demand for business travel is normally distributed with a mean of 100 and standard deviation of 20, it is your job to decide:
a) How many rooms to save for business travelers.
b) How does this answer change if you can find budget travelers to occupy the leftover rooms that you could not sell to the business travelers, but only for $100?
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