Assignment Detail:- BUMGT5981 Analytical Decision Making
Assessment Part - Individual report
Purpose
This assignment assesses your ability to calculate and interpret data -analytical skills- plus how this may feed into management plans or strategies -interpretation of analytical results-- Take carful note of the marks allocated for each part as a guide to the effort required to provide a sufficient answer that part-
Assessment Question
The Endless Point Rest is a popular and friendly family coastal resort- The resort consists of 122 self contained family style units and 24 hour reception- The pricing policy follows a fixed low rack rate; the same price on every room- This strategy keeps the guest rolling in and makes the resort the envy of other local accommodation providers as these establishments are rarely more than half full- The friendly owners of Endless Point Rest, known as Ma and Pa, have a policy of not charging no shows- As Ma says "if they can't come then we got no right to take away their hard earned money and anyway, we want to see them next time-"
Just today, Ma and Pa's son Emmet has returned home after completing his business degree- He sits Ma and Pa down-
"Ma and Pa, we don't have to be losing money - we're fully booked every night of the year - and don't you see that a no show means the room is lost????" Emmet's eyes light up- "I can do some calculations and work out a plan - but we need to overbook!"
"I don't know Emmet" says Pa, "we still got the room for the next night but I can't build another one in just a few hours if too many families show up- And that old tent with holes we used to use for emergencies just aint so popular anymore- ""Leave that to me" replies Emmet-
Emmet's research has profiled no shows based on a year -365 days- of records:
Booking no shows -# rooms-
Nights
0
20
1
53
2
65
3
74
4
49
5
36
Emmet has estimates that every no show is a loss if $73 per room per night- So he makes a deal with BillyBob, the manager of Lucky Zest resort- "Billy-Bob, take our walks and we'll pay the charge- I know your rack rate is $230 a night - what about we pay you $90 a room per night for getting our free business???? We'll never walk more than 12 to you any one night-"
Billy-Bob knows a good deal when he hears it- "Ok, covers our variable costs easy - and we always got rooms - you've got a contract-"Emmet knows the loss from a walk is more than just paying the cost of Billy-Bob's resort room- Even though the walked customer will have already paid The Endless Point Rest $97 -for the unavailable room-, Emmet estimates the additional cost -loss of good will, loss of additional services- to be $110 per walked guest-
Parts:
Question 1- Calculate the expected opportunity loss per night sustained by The Endless Point Rest-
Question 2- Calculate the number of rooms to be overbooked by The Endless Point Rest to minimise the expected loss in the long run -maximum 12 no shows and assume guest length of stay is one night-- What is the expected average gain per night from overbooking???? Show all workings-
Question 3- Apply the critical fractile criterion decision rule to verify your answer to task 2- Does this confirm or contradict the result for Part 2???? Why is this???? Explain in plain English what the critical fractile actually indicates with regard to its interpretation-
Question 4- Prepare a 150 words -maximum- script to be used by staff when walking a family -i-e-, how staff explain to disgruntled families a room is not available-- What other measures may be used or implemented by the Endless Point Rest to support this overbooking strategy????
Attachment:- Analytical Decision Making-rar
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