(Answered) : 7. The manager of a hotel is trying to decide how many rooms to overbook. Rooms normally rent for $79 a night, cost $25 a night to

7. The manager of a hotel is trying to decide how many rooms to overbook. Rooms normally rent for $79 a night, cost $25 a night to maintain, and any overbooked customer is sent to a nearby hotel at a cost of S35 per night. How many rooms should this hotel overbook? No-shows Probability 05 .15 .20 .20 .20 .15 .05 10

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Expert Answer

To decide how many rooms to overbook, we need to follow the below mentioned procedure:

First, we will calculate the cumulative probability of each “No-Shows” as shown below:
https://d2vlcm61l7u1fs.cloudfront.net/media%2F174%2F1746f1ee-94ce-42d3-93c4-aaf2f83d5c16%2FphplcDuIx.png
Now, given:

Room rent / Night ,R= $ 79

Maintenance cost/Night,

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