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    Hilton Inn Probability and Inventory Control for Overbooking

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    The Hilton Inn has decided to use good inventory control to decide how many customers to book to the hotel. The hotel has 100 rooms and Hilton Inn charges $120 per night per room. The number of no-shows has the following probability distribution:

    Number of no shows Probability
    0 0.10
    1 0.15
    2 0.20
    3 0.15
    4 0.10
    5 0.05
    6 0.05
    7 0.05
    8 0.05
    9 0.05
    10 0.05

    If Hilton Inn overbooks and no room is available, the customer is sent to the Sheraton across the street and the Hilton Inn customers, seeing that this is a nicer hotel, accept this without any protest or requesting any further compensation. Hilton Inn pays the Sheraton $170 for each room they use in an overbooking situation (but keeps the $120 they got from the customer).

    Under the above described scenario, how many rooms should Hilton Inn overbook?

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    Solution Preview

    As per the given information, the given problem is a single period stochastic inventory model. The probability distribution of the number of no-shows of overbooking is given. Further, it is given that, Hilton Inn Charge $120 ...

    Solution Summary

    Hilton Inn probability and inventory controls for overbooking hotel rooms are examined.