The document discusses two cases of overbooking to maximize profits:
1) An inn is considering overbooking rooms since no-shows have left rooms vacant. Overbooking analysis shows an expected nightly gain of $21.40 from an average room rate of $69 and costs of $119 for alternate accommodation.
2) An airline serving Denver and Steamboat Springs wants to overbook flights to avoid empty seats. Operating costs are $150 for pilot, $100 for co-pilot, $30 for fuel and $20 for landing fees. The airline sells tickets for $80 and costs $50 plus a later flight for denied boarding.
The document discusses two cases of overbooking to maximize profits:
1) An inn is considering overbooking rooms since no-shows have left rooms vacant. Overbooking analysis shows an expected nightly gain of $21.40 from an average room rate of $69 and costs of $119 for alternate accommodation.
2) An airline serving Denver and Steamboat Springs wants to overbook flights to avoid empty seats. Operating costs are $150 for pilot, $100 for co-pilot, $30 for fuel and $20 for landing fees. The airline sells tickets for $80 and costs $50 plus a later flight for denied boarding.
The document discusses two cases of overbooking to maximize profits:
1) An inn is considering overbooking rooms since no-shows have left rooms vacant. Overbooking analysis shows an expected nightly gain of $21.40 from an average room rate of $69 and costs of $119 for alternate accommodation.
2) An airline serving Denver and Steamboat Springs wants to overbook flights to avoid empty seats. Operating costs are $150 for pilot, $100 for co-pilot, $30 for fuel and $20 for landing fees. The airline sells tickets for $80 and costs $50 plus a later flight for denied boarding.
The architect for the new undergraduate library is interested in a floor plan that would be viewed as convenient by users. Based on survey data from the old library, student movements between different areas in hundreds of trips per month are noted in the flow matrix below. Prepare a good initial rectangular layout that minimizes total flow distance between nonadjacent areas ; then use operation sequence analysis to improve the layout. Library Area A B C D E F A Reserve Room - 5 9 3 7 1 B Reference Room 3 - 8 2 6 2 C Copy Room 1 1 - 7 2 3 D Stacks 2 2 10 - 2 5 E Periodical Room 1 2 6 3 - 2 F Computer Room 1 1 1 4 2 - Library Area A B C D E F A Reserve Room - 8 10 5 8 2 B Reference Room - - 9 4 8 3 C Copy Room - - - 17 8 4 D Stacks - - - - 5 9 E Periodical Room - - - - - 4 F Computer Room - - - - - - Triangularized total flow matrix Initial Layout A B C D E F Nonadjacent Area Pairs Flow Distance Total AC 10 x 2 = 20 AF 2 x 2 = 4 DC 17 x 2 = 34 DF 9 x 2 = 18 76 Final Layout A C D B E F Nonadjacent Area Pairs Flow Distance Total AD 5 x 2 = 10 AF 2 x 2 = 4 BD 4 x 2 = 8 BF 3 x 2 = 6 28 MANAGING CAPACITY AND DEMAND A family-run inn is considering the use of overbooking, because the frequency of no-shows listed below has left many rooms vacant during the past summer season. An empty room represent an opportunity cost of $69, which is the average room rate. Accomodating an overbooked guest is expensive, however, because the nearby resort rooms average $119 and the inn must pay the difference. What would be the expected gain per night from overbooking? No-shows 0 1 2 3 Frequency 4 3 2 1 Cost of walking guest = $119 - $69 = $50 Overbooking lost table : No-shows Probability Reservation Overbooked 0 1 2 3 0 .4 1 .3 2 .2 3 .1 Expected loss Cost of walking guest = $119 - $69 = $50 Overbooking lost table : No-shows Probability Reservation Overbooked 0 1 2 3 0 .4 0 50 100 150 1 .3 69 0 50 100 2 .2 138 69 0 50 3 .1 207 138 69 0 Expected loss $69.00 $47.60 $61.90 $100.00 Expected nightly gain from overbooking : $69.00 - $47.60 = $21.40 An airline serving Denvers International Airport and Steamboat Springs, Colorado, is considering overbooking its flights to avoid flying with empty seats. For example, the ticket agent is thinking of taking seven reservations for an airplane that has only six seats. During the past month, the no-show experience has been The operating costs associated with each flight are pilot, $150 ; first officer, $100 ; fuel, $30 ; and landing fee, $20. What would be your recommendation for overbooking if a one-way ticket sells for $80 and the cost of not honoring a reservation is a free lift ticket worth $50 plus a seat on the next flight? What is the expected profit per flight for your overbooking choice? No-shows 0 1 2 3 4 Percentage 30 25 20 15 10