A family-operated inn in State College, Pennsylvania, is considering overbooking to minimize their revenue loss due to

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A family-operated inn in State College, Pennsylvania, is considering overbooking to minimize their revenue loss due to no-shows and last-minute cancellations. The cost of an empty room is estimated at $95 per night. When the inn is fully occupied, customers with guaranteed reservations are placed in nearby expensive hotel chains, averaging $165 per night. In addition to paying the difference in room rates, the inn also gives a $20 voucher for taxi fare.

Determine the inn’s overbooking policy, given that the distribution of no-shows is Uniform over the interval (5, 25).

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Service Systems Engineering And Management

ISBN: 978-0367781323

1st Edition

Authors: A. Ravi Ravindran ,Paul M. Griffin ,Vittaldas V. Prabhu

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