Overbooking Estimation ONLY TYPE LOWER CASE (WITHOUT DOT)

Irish Hotel has maintained a policy to overbook to minimize the loss of revenue due to no shows. The number of quests who reserve a room but do not show up is normally distributed with a mean of 50 and a standard deviation of 20. The hotel has a capacity of 400 rooms. The average room rate is $250 and the service recovery cost for bumped customers is approximately $80.

Q14. What is the optimal overbooking level?

a. 64 Rooms b. 67 Rooms c. 70 Rooms d. 73 rooms

Q15. What is the expected spoilage?

a. 1.858 b. 2.858 c. 3.858 d. 4.858

Q16. How much would Irish Hotel expect to pay to the bumped guests?

a. $1,048.64 b. $1,148.64 c. $1,248.64 d. $1,348.64

Q17. How many rooms on average could generate the revenue under the optimal overbooking policy?

a. 395 b. 397 c. 399 d. 401