16.8 (Park Hyatt) Consider the example of the Park Hyatt Philadephia discussed i

Question

16.8

(Park Hyatt) Consider the example of the Park Hyatt Philadephia discussed in the text. Recall that the full fare is $225, the expected full-fare demand is poison with mean 27.3, the discounted fare is $159 and there are 118 king/queen rooms. Now suppose the cost of an occupied room is $45/night. That cost includes the labor associated with prepping and cleaning a room, the additional utility use. Suppose the Park Hyatt wishes to maximize expected profit larger than expected revenue. What is the optimal protection level for the full fare?

Explanation / Answer

Cost of overage (excess) (Co) = 159-45 =

Poisson Demand Mean (µ) = 27.3 Cost of underage (shortage) (Cu) = 225-159-45 21

Cost of overage (excess) (Co) = 159-45 =

114 Critical Ratio or P(D<=Q) = Cu / (Cu + Co) = 0.1556 Using POISSON_INV function, Protection Level = 21

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.