The Marriott Hotel in Central has 100 rooms available for Dec 31. There are two types of customers, business customers and leisure customers. Marriot charges a high rate of $250/night and a low rate of $120/night. High-rate guests do not need pre-booking and has time flexibility; low-rate guests need pre-booking. Assume business customers always take the high rate option and leisure customers always take the low rate option, Leisure customers always book far earlier before business customers and there are sufficient leisure customers. The total number of business customers is uncertain and its demand distribution is given in the following table: Number of business customers Probability 56 0.06 57 0.08 58 0.19 59 0.21
61 0.16 62 0.07 63 0.03 Which of the following actions would increase the optimal protection level for business customers? Increase both the high and low rates by a factor of two Decrease both the high and low rates by half Decrease both the high and low rates by $20 Increase both the high and low rates by $20 Decrease the high rate from $300 to $200
Suppose there is another hotel (Hotel B) nearby Marriott Hotel B has ample rooms and there is always a room available for walk-in customers. If there is no available room for walk-in customer in Marriott, the customer can be diverted to Hotel B and the two hotels share the revenue from the diverted customer. Specifically, the diverted customer pays $250 to Hotel B; Marriott gets $80 as a referral fee and Hotel B keeps the remaining $170. In this scenario, how many rooms should be protected for business customers in Marriott? 60 59 61 58 62
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