What is the probability that the hotel will sell out

Assignment Help Risk Management

Reference no: EM132463842

Assessment Part A
To answer Questions 1 to 4 you may create a simulation model in one worksheet. Use sample size of 1000 for all your simulations.

Question (1) What is the expected profit at the current allocation strategy of 50 rooms for the premium price of
$500? Calculate the 95% confidence interval for the expected profit. What does this confidence interval indicate about the expected profit of the hotel?

Question (2) Under the current allocation strategy of 50 rooms at the premium price of $500:
a. What is the probability that the hotel will sell out?
b. What is the probability of having a profit of more than $50,000?

Question (3) Vary the number of premium rooms offered from 5 to 50 (in increments of 5 rooms). What is the optimal number of rooms to be offered at premium price of $500?

Question (4) Under the optimal room allocation strategy from Question (3):
a. What is the probability that the hotel will sell out?
b. What is the probability of having a profit of more than $50,000?
c. Calculate the 95% confidence interval for the expected profit. Compare this interval with your answer to (1). Explain why the hotel's profit would change if you change the room allocation strategy.

Assessment Part B
To answer Questions 5 and 6 you may create a simulation model in one worksheet. Use a sample size of 1000 for all your simulations.

No-shows

A customer who books a regular room has a 15% chance of cancelling, for which the hotel receives no revenue. A customer who books a premium room at $500 per night has a 5% chance of not showing up, for which the hotel DOES receive the $500 in revenue because those rooms are non-refundable. In both cases, the room is now available to be re-booked to walk-in customers that night. Walk-in demand is in addition to the regular demand and has discrete uniform distribution with a minimum of 5 and maximum of 10 customers, regardless of the price. Walk-in guests are charged the most recent regular room rate. If the hotel is or becomes full, extra walk-in customers are turned away, and the hotel receives no revenue.

Question (5) Considering the no-shows and cancelations, what is the optimal number of rooms to allocate to the premium category at the price of $500 per night?

Question (6) You want to evaluate the impact of changing the daily price increase of the regular room rate. Run a simulation varying the daily price increase from $30 to $70, inclusive, in increments of $5. Explain how the value of the daily price increase affects your premium room allocation strategy.

Attachment:- Assignment Monte Carlo Simulation.rar

Reference no: EM132463842

Questions Cloud

Calculating the value of the test statistic : A random sample of 190 found that 45% of the readers owned a laptop. Find the value of the test statistic. Round answer to two decimal places.

Create a spreadsheet to compute the cost of new computers : Create a spreadsheet to compute the cost of new computers and the cost of upgrading computers when applicable and purchasing new ones for the remainder

Compute company predetermined overhead rate for the year : Compute the company's predetermined overhead rate for the year, calculate the total overhead applied, and determine the amount of under

Calculate the value of the constant a : The breaking strength X of a concrete slab has a density function f(x)= Ae(-x/100)dx for breaking strength values in the range, 120 = x = 150.

What is the probability that the hotel will sell out : What is the optimal number of rooms to allocate to the premium category at the price of $500 per night and What is the probability of having a profit.

How do resolve staff accountant dilemma : You realize that if you fail to do what your boss wants, you may receive an unfavorable performance evaluation. How do you resolve this dilemma?

Calculate book value per share of common stock : Calculate book value per share of Common Stock as of end of the FY 2018.The preferred stock was noncumulative and had a call price of $105.

What percentage would sales from tone have to increase : What percentage would sales from T-1 have to increase in order to make up the financial loss from dropping T-2?expected to increase by 10% next year; the firm's

What is the probability distribution function of x : Let X represent the number of red balls drawn. What is the probability distribution function of X?

User Account

All Pages