Instructions: Read and study the case of Marriot International Inc. Identify and recognize the 5 steps of management science process used in the room pricing. State how the observation done, how they identify the problem, how they construct a model, model solution and the implementation.

1. observation
2. definition of the problem
3. model construction
4. model solution
5. implementation of solution

Case of Marriot International Inc.

Management Science Application Room Pricing with Management Science at Marriott Marriott Mariott International, Inc., headquartered in Bethesda, Maryland, has more than 140.000 employees working at more than 3,300 hotels in 70 countries is hores franchises include Mattiott, JW Marriot, The Ritz-Carlton, Renaissance, Residence Inn Courtyard Towietlace Suites Fairfielu inn and Springhill Suites. Forturie magazine tariks Marlott a the lodging industry's most adnited company and one of the best conpanes to work for Marratt uses a revenue management system for individual hotel bookings This system provides forecasts of customer demand and pricing controls, makes optimal inventory alloca- tions, and interfaces with a reservation system that handles more than 15 million transactons each year. The system makes A key challenge is estimating the value of the business the I demand forecast for each lote category and length d stay hotel is turning away if the room invertory is given to a group for eachi arrival day up to 30 days in advance, and it provides father than being held for individus bookings inventory allocations to the reservation system. This inventory Te address the group booking process Marriott developed of hetel rooms is then sold to individual customers through a decisions support system, Group Pricing Optiriize (GP) channels such as Marriott.com, the company's toll-frezres that provides guidance to Marriott petsouriel on pricing hotel ervation number, the hotels directly and global distribution rooms for group customers, GFO uses various management systems science modeling techniques and tools, including simulation, One of the most significant revenue streams for Marriott forecasting, and optimization techniques to recommend is for group sales, which can contribute more than half of a on optimal price rate. Marriott estimates that GPO provided full-service hotel's revenue However, group business has chal- an improvement in profit of over $120 million derived from lenging characteristics that introduce uncertainty and make $1.3 billion in group business in ts first 2 years of use modeling it difficult, including langer booking windows fau compared to those for individuals) price negotiation as part Sere. Based on .Hormy. J. M. P. Dave. M Myers, and of the booking process, demand for blocks of rooms and lack I Teuca. "Marriott latenuto al creasca Revenue by Laplatching of demand data for a grup est, a hotel must know if a Grcip Pricing Optimizer" Interfaces 40 m Comuary February it has sufficient mamt and determine a recommended rate 2010) 47.5