n 6: Hotel Overbooking as. a popular luxury hotel in San Francisco, had a policy of overbooking the room rentals to make e customers who would make reservations but failed to show up. The average lost contribution ant room was $200 per night if a customer reserved a room but was a "no-show". About 10% of 3 who showed up (with reservation ) but could not be honored because the hotel was full . could ad without any extra cost to Gates . Another 30 % were satisfied with being transferred to hotel at a cost to the Gates of $30 per reservation. The remaining 60% of the guests were so 1! Gates could expect a loss of future business with a net present value of approximately $500. iager reviewed his records and found the following distribution of no-shows: Number of no- shows Probability 2 3 4 t is the expected cost of not accomm odating a customer with a reservation? t is the optimal level of overbooking that you would recommend to Gates? otel manager you realize that $500 may be an underestimate of loss of future business for upset mers. You im pute a cost of loss of goodwill of $2000. Considering this, your optimal level of rocking as computed above would: Decrease Increase Remain Unchanged Not enough information to answer this