LA Villa is a village in the Italian Apps. Given its enormous popularity among S
ID: 446479 • Letter: L
Question
LA Villa is a village in the Italian Apps. Given its enormous popularity among Swiss, German, Austrian, and Italian skiers, all of its beds are always booked in the winter season and there are, on average, 1200 skiers in the village. on average, skiers stay in la villa for 10 days. a) how many new skiers are arriving on average in la Villa every day? b) a study done by the largest hotel in the village has shown that skiers spend on avg $50/person on the 1st day and $30/person on each additional day in local restaurants. the study also forecasts that due to increased hotel prices-avg length of stay for the 2003/2004 season will be reduced to 5 days. What will be the percentage change in revenues of local restaurants compared to last yr(when skiers still stayed for 10 days)? Assume hotels continue to be fully booked!
Explanation / Answer
a. LITTLE's law will be applied to calculate the number of new skires arriving every day.
average flow time = 10 days
average inventory = 1200 skiers.
Thus, average inventory = average flow rate*average flow time
1200 skiers = average flow rate*10 days
or average flow rate = 1200 skiers/10 days = 120 skiers per day.
b. Revenue per skier when stay was for 10 days = $50+9 days*$30 = 50+270 = $320 per skier.
Revenue per skier when stay was for 5 days = $50+4 days *$30 = 50+120 = $170 per skier.
Thus % change = (320-170)/320
= 150/320 = 46.875%
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