Question 15 1 out of 1 points Use the following information to determine the opt

Question

Question 15 1 out of 1 points Use the following information to determine the optimal overbooking policy for a spa center at downtown Marquette. The center's capacity is 12 guests. 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 guest is $80, and the cost of lost goodwill per guest due to overbooking is approximately S40. No-Show:s Probability 0.35 0.35 0.30 Calculate the total expected profit with 13 reservations (which means 1 overbooking) Selected Answer. d $922 Answers: a. Need additional information to calculate the total expected profit b. $960 $918 d. $922 e. $884

Explanation / Answer

Q15.

Profit earned from 13 reservations = 13*80 = $ 1040

Loss with 0 no shows = 80+40 = 120

Loss with 1 no show = 80*1 = 80

Loss with 2 no shows = 80*2 = 160

Expected loss = 120*0.35 + 80*0.35 + 160*0.3 = 118

Expected profit = 1040 - 118 = $ 922

Q16.

Profit earned from 14 reservations = 14*80 = $ 1040

Loss with 0 no shows = 2*(80+40) = 240

Loss with 1 no show = (80+40) + 80 = 200

Loss with 2 no shows = 80*2 = 160

Expected loss = 240*0.35 + 200*0.35 + 160*0.3 = 202

Expected profit = 1120 - 202 = $ 918

Q17.

Based on the above analysis, Expected profit is more with 1 overbooking. Therefore, selected policy is

13 reservations

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