You are going to do a calculation for a possibility of selling 100 Rooms and you have a full price of $200 a night and $100 a night for discount price.

Say you manage a hotel at a resort beachfront and you have 100 rooms in your hotel.

Weekends are generally pretty good with near 100% occupancy during the summer months, but the days Monday through Thursday the hotel almost always has rooms left over.

The policy of the hotel chain is to sell blocks of rooms to travel agencies for those days of the weeks. Rooms are sold in blocks of 5.

The normal price of a room is $200/night for Monday-Thursday

Rooms sold to travel agencies are sold for $100/night.

 

You are going to do a calculation for a possibility of selling 100 Rooms and you have a full price of $200 a night and $100 a night for discount price.

Create formula that calculate an expected payoff and find the optimum mix of discount of full price room in order to win.

This exercise here is to calculate the best mix of discount and full price room in order to maximize your revenue.

The probability of selling 50% of the room is 1%

The probability of selling 55% of the room is 4%

The probability of selling 60% of the room is 7%

The probability of selling 65% of the room is 9%

The probability of selling 70% of the room is 11%

The probability of selling 75% of the room is 15%

The probability of selling 80% of the room is 20%

The probability of selling 85% of the room is 15%

The probability of selling 90% of the room is 11%

The probability of selling 95% of the room is 5%

The probability of selling 100% of the room is 2%

 

On Excel worksheet Construct the following for this problem

·         An expected payoff tables

·         An opportunity loss table

·         Indicate the optimum choice

·         And The price of perfect information

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