What is the optimal protection level for the full-price room

Assignment Help Business Management

Reference no: EM133711383

Problem

Capacity Allocation Problem: Buffalo Inn

A. Inn at Buffalo has 150 rooms with standard queen-size beds and two rates: a full price of $399 and a discount price of $119.

B. To receive the discount price, a customer must purchase the room at least two weeks in advance (this helps to distinguish between leisure travelers, who tend to book early, and business travelers, who value the flexibility of booking late).

C. For a particular Tuesday night, the hotel estimates that the demand from leisure travelers could fill the whole hotel while the demand from business travelers is distributed normally with a mean of 50 rooms and a standard deviation of 40.

Task

A. What is the (closest) optimal booking limit that can maximize the hotel's total revenue?
B. What is the optimal protection level for the full-price rooms?
C. If the standard deviation of business travelers increases from 40 to 50, then what is its influence

Reference no: EM133711383

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