Practical Operations Management
Practical Operations Management
2nd Edition
ISBN: 9781939297136
Author: Simpson
Publisher: HERCHER PUBLISHING,INCORPORATED
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Chapter 15, Problem 24P

(a)

Summary Introduction

Interpretation:

It is required to determine the two future states of nature the A Hotel faces.

Concept Introduction:

In many countries, hotels have evolved as extensions of the domestic hospital. The nature of the product in the hotel industry also determines that most units will be a small major objective in the face of opposition.

(a)

Expert Solution
Check Mark

Explanation of Solution

Given information:

The A Hotel has the 56 rooms. A rented room represents $150 in profit, while turning away a customer who made a reservation costs $100 but the hotel did not have a room available. However many reservation the A Hotel accepts, there is a 50% chance that number of customers will show up to claim their reservations and a 50% chance that one less than the total number of reservations will show up.

The two future states of nature A Hotel are as follows:

  • All those customers who have reservations shown up and the 56 rooms are occupied then there are no dissatisfied customers.
  • But the one customer who has the reservations will show up the resulting in 55 rooms are being occupied. And the one-room is vacant, thus, there are no dissatisfied customers.

(b)

Summary Introduction

Interpretation:

The expected value of accepting the exactly 56 reservations of the policy.

Concept Introduction:

In many countries, hotels have evolved as extensions of the domestic hospital. The nature of the product in the hotel industry also determines that most units will be a small major objective in the face of opposition.

(b)

Expert Solution
Check Mark

Explanation of Solution

Given information:

The A Hotel has the 56 rooms. A rented room represents $150 in profit, while turning away a customer who made a reservation costs $100 but the hotel did not have a room available. However many reservation the A Hotel accepts, there is a 50% chance that number of customers will show up to claim their reservations and a 50% chance that one less than the total number of reservations will show up.

It is given that the probability 0.5 of the 56 rooms being occupied that generates the profit of $150 per room and the probability 0.5 of the 55 occupied that generates the profit of $150 per room.

Calculate the expected value of the profits of accepting exactly 56 reservations.

  Expected value=0.5×56+55×$150=$75(56+55)=$8,325

Thus, the expected value of accepting the exactly 56 reservations of the policy is $8,325 .

(c)

Summary Introduction

Interpretation:

The expected value of accepting the exactly 57 reservations of the policy.

Concept Introduction:

In many countries, hotels have evolved as extensions of the domestic hospital. The nature of the product in the hotel industry also determines that most units will be a small major objective in the face of opposition.

(c)

Expert Solution
Check Mark

Explanation of Solution

Given information:

The A Hotel has the 56 rooms. A rented room represents $150 in profit, while turning away a customer who made a reservation costs $100 but the hotel did not have a room available. However many reservation the A Hotel accepts, there is a 50% chance that number of customers will show up to claim their reservations and a 50% chance that one less than the total number of reservations will show up.

There is a 50% probability that the 57 customers show up that one customer will have to turned away and the probability that one out of the 57 reservations, does not show up that result in all the 56 reservations does not show up resulting in all the 56 rooms are occupied.

It is given that the probability 0.5 of the 56 rooms being occupied that generates the profit of $150 per room and the one customer who had the reservation turned away that result a loss of $100 .

The probability 0.5 of the 55 occupied that generates the profit of $150 per room. There is no dissatisfied customer.

Calculate the expected value of the profits of accepting exactly 57 reservations.

  Expected value=0.5×(56×$150$100)+0.5×55×$150=$4,150+$4,200=$8,350

Thus, the expected value of accepting the exactly 57 reservations of the policy is $8,350 .

(d)

Summary Introduction

Interpretation:

It is required to determine that A Hotel will say yes or no, if the A Hotel already has 56 reservation for tomorrow, and the customer had called who wants to book a room for tomorrow.

Concept Introduction:

In many countries, hotels have evolved as extensions of the domestic hospital. The nature of the product in the hotel industry also determines that most units will be a small major objective in the face of opposition.

(d)

Expert Solution
Check Mark

Explanation of Solution

Given information:

The A Hotel has the 56 rooms. A rented room represents $150 in profit, while turning away a customer who made a reservation costs $100 but the hotel did not have a room available. However many reservation the A Hotel accepts, there is a 50% chance that number of customers will show up to claim their reservations and a 50% chance that one less than the total number of reservations will show up.

The A Hotel should accept for the following reasons:

The expected value $8,350 is obtained by accepting the 57 reservations that is greater than the expected value $8,325 which is obtained by accepting the 56 reservations. So there will be an advantage of $25 in accepting one more reservation.

Therefore, the A Hotel will say yes to the new customer.

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