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2. Overbooking is the practice of booking seats/rooms in excess of the actual seats available in flights or rooms available in hotel. Whenever there are chances of cancellations (at the last hour) or no-shows (customer not showing up), if airlines/hotels does not do overbooking, it will end up with a lot of unused capacity Optimum overbooking pe price for the unit of capacity sold be net cost incurred in making backup arrangements in case the firm is not able to provide the booked unit of capacity to the customer. Cost of understocking p Cost of overstocking b Optimal Service Level p*100/(p-b) Optimum number of over-bookings Mean cancelltions k* Standard deviation of cancellations where k service factor for optimum service level * Stocking refers to excess bookings (Bookings above capacity) done by Airline/hotel Techne Hotels and Resorts has 100 deluxe rooms and has observed in the past that cancellations at the last minute (including no shows) follow a normal distribution with mean of 15 and standard deviation of 5. The hotel charges room rent of PHP 3500 per day from all its customers due to covid-19 pandemic. Because of overbooking olicy, whenever Techne Hotels and Resorts faces shortage of rooms it accommodates the customers in another hotel in the neighborhood which charges PHP 4900 to Techne Hotels and Resorts for providing rooms at short notice.

2. Overbooking is the practice of booking seats/rooms in excess of the actual seats available in flights or rooms available in hotel. Whenever there are chances of cancellations (at the last hour) or no-shows (customer not showing up), if airlines/hotels does not do overbooking, it will end up with a lot of unused capacity Optimum overbooking pe price for the unit of capacity sold be net cost incurred in making backup arrangements in case the firm is not able to provide the booked unit of capacity to the customer. Cost of understocking p Cost of overstocking b Optimal Service Level p*100/(p-b) Optimum number of over-bookings Mean cancelltions k* Standard deviation of cancellations where k service factor for optimum service level * Stocking refers to excess bookings (Bookings above capacity) done by Airline/hotel Techne Hotels and Resorts has 100 deluxe rooms and has observed in the past that cancellations at the last minute (including no shows) follow a normal distribution with mean of 15 and standard deviation of 5. The hotel charges room rent of PHP 3500 per day from all its customers due to covid-19 pandemic. Because of overbooking olicy, whenever Techne Hotels and Resorts faces shortage of rooms it accommodates the customers in another hotel in the neighborhood which charges PHP 4900 to Techne Hotels and Resorts for providing rooms at short notice.

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Compute the following using excel. Use the formula given in the picture below.
2. Overbooking is the practice of booking seats/rooms in excess of the actual seats available in flights or rooms available in hotel. Whenever there are chances of cancellations (at the last hour) or no-shows (customer not showing up), if airlines/hotels does not do overbooking, it will end up with a lot of unused capacity Optimum overbooking p= price for the unit of capacity sold b- net cost incurred in making backup arrangements in case the firm is not able to provide the booked unit of capacity to the customer. Cost of understocking -p Cost of overstocking = b Optimal Service Level - p*100/(p+b) Optimum number of over-bookings = Mean cancellations + k* Standard deviation of cancellations where k = service factor for optimum service level * Stocking refers to excess bookings (Bookings above capacity) done by Airline/hotel Techne Hotels and Resorts has 100 deluxe rooms and has observed in the past that cancellations at the last minute (including no shows) follow a normal distribution with mean of 15 and standard deviation of 5. The hotel charges room rent of PHP 3500 per day from all its customers due to covid-19 pandemic. Because of overbooking alicy, whenever Techne Hotels and Resorts faces shortage of rooms it accommodates the customers in another hotel in the neighborhood which charges PHP 4900 to Techne Hotels and Resorts for providing rooms at short notice.
Transcribed Image Text:2. Overbooking is the practice of booking seats/rooms in excess of the actual seats available in flights or rooms available in hotel. Whenever there are chances of cancellations (at the last hour) or no-shows (customer not showing up), if airlines/hotels does not do overbooking, it will end up with a lot of unused capacity Optimum overbooking p= price for the unit of capacity sold b- net cost incurred in making backup arrangements in case the firm is not able to provide the booked unit of capacity to the customer. Cost of understocking -p Cost of overstocking = b Optimal Service Level - p*100/(p+b) Optimum number of over-bookings = Mean cancellations + k* Standard deviation of cancellations where k = service factor for optimum service level * Stocking refers to excess bookings (Bookings above capacity) done by Airline/hotel Techne Hotels and Resorts has 100 deluxe rooms and has observed in the past that cancellations at the last minute (including no shows) follow a normal distribution with mean of 15 and standard deviation of 5. The hotel charges room rent of PHP 3500 per day from all its customers due to covid-19 pandemic. Because of overbooking alicy, whenever Techne Hotels and Resorts faces shortage of rooms it accommodates the customers in another hotel in the neighborhood which charges PHP 4900 to Techne Hotels and Resorts for providing rooms at short notice.
Capacity Allocation Among Multiple Segments: Airlines and Hotels • Let P, be a price charged to the business traveller and P, the price charged to the leisure traveller. • Cost of understocking = P, - PI Cost of overstocking P • Optimal Service Level = %3D (C, x 100)/ (C, + Co) = (P, - P,)*100/( Po- P,+ P,) = (P, - P,)*100/ P, Optimum protection level for the high-price segment = Mean demand for the high-price segment+ k x Standard deviation of the demand for high price %3D • Where k = service factor for optimal service level
Transcribed Image Text:Capacity Allocation Among Multiple Segments: Airlines and Hotels • Let P, be a price charged to the business traveller and P, the price charged to the leisure traveller. • Cost of understocking = P, - PI Cost of overstocking P • Optimal Service Level = %3D (C, x 100)/ (C, + Co) = (P, - P,)*100/( Po- P,+ P,) = (P, - P,)*100/ P, Optimum protection level for the high-price segment = Mean demand for the high-price segment+ k x Standard deviation of the demand for high price %3D • Where k = service factor for optimal service level
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