Maximize the average daily profit

Reference no: EM132096530

The Harriet Hotel in downtown Boston has 100 rooms that rent for $150 per night. It costs the hotel $30 per room in variable costs (cleaning, bathroom items, etc.) each night a room is occupied. For each reservation accepted, there is a 5% chance that the guest will not arrive. If the hotel overbooks, it costs $200 to compensate guests whose reservations cannot be honored. How many reservations should the hotel accept if it wants to maximize the average daily profit? You may use Microsoft Excel with ASPE or R statistical programming to solve. Assume guests pay at check-in. If the hotel is overbooked, there is no check-in but hotel must pay customer $200 if they are turned away. No check-in, no revenue, no cleaning costs. Manually try numbers over 100 to see which optimizes profit.

Reference no: EM132096530

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