Demand for hotel rooms at the Omni Hotel in Nashville, TN for New Year\'s Eve is

Question

Demand for hotel rooms at the Omni Hotel in Nashville, TN for New Year's Eve is high and rooms are priced at $300 each. However, there are always no shows. Based on history, the manager E. Presley has determined that no shows are uniformly distributed between 5 and 13 for this night. If more guests than there are rooms show up, the hotel uses a hotel near the airport for an additional cost to itself of $250. The hotel has 400 rooms. How many rooms 23. total should be booked for New Year's Eve? a. b. 218 c. 446 d. 409 e. None of these Three benefits to a firm of locating in a cluster are: a. Specialized suppliers, lobbying power, trained workers 24. b. Specialized suppliers, loyalty of workers, trained workers c. Specialized suppliers, loyalty of workers, group think d. Decreased competition, lobbying power, trained workers e. All of these Revenue management is most appropriate under which of the following situations? a. Perishable capacity b. Excess capacity c. Variable capacity d. All of the above e. None of these 25. 26. Southside uses a continuous replenishment system to manage its supplies of disposable paper cups. The average demand is 200 cups per day with a standard deviation of 25 cups. The leadtime is 1 week with a standard deviation of 2 days. What is the reorder point if President Cabrera wants to maintain a 99% service level? a. 2334 b. 1145 c. 2345 d. None of these e. 1134 Last month, the Speedy Cycle calculated its Cash to Cash Time. It found its Days of AP was 7.84, its Days of AR was 5.88, and its Days of Inventory was 19.6. What is its Cash to Cash 27. Time? a. 5.88 b. None of these c. 17.64 d. 33.32 e. 21.56

Explanation / Answer

23. d. 409

Underbooking cost, Cu = 300 (cost of booking one room less than number of no shows)

Overbooking cost, Co = 250 (cost of booking one rooms more than number of no shows)

Critical ratio F(z) = Cu/(Cu+Co) = 300/(300+250) = 0.5454

Number of rooms to be overbooked = Minimum + F(z) * (Maximum - Minimum)

= 5 + 0.5454*(13-5) = 9 (rounded off)

Total number of rooms to be booked for new year's eve = Actual number of rooms + Number of rooms to be overbooked

= 400 + 9

= 409

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