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The Holiday Inn Riverside is a popular destination for fans traveling to watch the local university timbal] games, .d sometimes for visiting teams as well.

The Holiday Inn Riverside is a popular destination for fans traveling to watch the local university timbal] games, .d sometimes for visiting teams as well. History has shown that when the hotel is fully booked, the number of last-minute cancellations (at no cost to the customer) has a mean of 15 and a standard deviation of 4. The average room rate is $120 at the Holiday Inn. When the hotel is overbooked, the policy is to find a room in a nearby comparable hotel without overcharging the customer and to pay the prevailing rate (typically $175) on behalf of the overbooked customer.

1) What is the overage cost of overbooking one too many rooms? A. $55 B. $120 C. $25 D. $175

2) What is the underage cost of overbooking one too few rooms? A. $120 B. $25 C. $175 D. $55

3) What is the critical ratio (or service level) for the overbooking decision? A. 68% B. 100% C. 50% D. 32%

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