Use the following information to determine the optimal overbooking policy for a motel at a rural town in South Carolina. The motel's capacity is 30 rooms. The historic number of no-shows for a typical day, along with the probability of occurrence, is shown in the following table. The average profitability per room is $110, and the cost of lost goodwill per guest due to overbooking is approximately $60.

-Calculate the total expected profit with 32 reservations (which means 2 overbookings).
A)$3,300.00
B)$2,886.00
C)$2,897.50
D)$3,221.50
E)$2,827.00

Question

Use the following information to determine the optimal overbooking policy for a motel at a rural town in South Carolina. The motel's capacity is 30 rooms. The historic number of no-shows for a typical day, along with the probability of occurrence, is shown in the following table. The average profitability per room is $110, and the cost of lost goodwill per guest due to overbooking is approximately $60.
 
-Calculate the total expected profit with 32 reservations (which means 2 overbookings).
A)$3,300.00 
B)$2,886.00 
C)$2,897.50 
D)$3,221.50 
E)$2,827.00

Quizplus · Accepted Answer

The Answer of Use the following information to determine the optimal overbooking policy for a motel at a rural town in South Carolina. The motel's capacity is 30 rooms. The historic number of no-shows for a typical day, along with the probability of occurrence, is shown in the following table. The average profitability per room is $110, and the cost of lost goodwill per guest due to overbooking is approximately $60.
 
-Calculate the total expected profit with 32 reservations (which means 2 overbookings).
A)$3,300.00 
B)$2,886.00 
C)$2,897.50 
D)$3,221.50 
E)$2,827.00

Use the Following Information to Determine the Optimal Overbooking Policy