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RollerDice Problem Decision Models Review Session 5 1 RollerDice is building a new hotel/casino in Las Vegas. The hotel will have two kinds of rooms, regular and luxury. They plan to charge $120 per night for regular rooms and $360 per night for luxury rooms. Based on extensive market research and past-occupancy data, RollerDice believes that the daily demand for regular rooms will be normally distributed with a mean of 100 and a standard deviation of 30. Likewise, the daily demand for luxury rooms will be normally distributed with a mean of 30 and a standard deviation of 5. Furthermore, the demands have a 30% correlation. If demand for either type of room exceeds the availability, the customer is lost to another hotel. The demand should be rounded to the nearest non-negative whole number. RollerDice first wants to evaluate the plan of having 100 regular rooms and 50 luxury rooms. RollerDice would like to know what its expected profit under this room allocation and also how likely it is to lose one or more customers. Now suppose that RollerDice wants to find the number of regular and luxury rooms to build to maximize the expected revenue. Choose the best policy in the following set of reasonable room allocations: 90 regular rooms, 55 luxury rooms 100 regular rooms, 50 luxury rooms 110 regular rooms, 45 luxury rooms 120 regular rooms, 40 luxury rooms Decision Models Review Session 5 2 RollerDice Demand Description Based on extensive market research and past-occupancy data, RollerDice believes that the daily demand for regular rooms will be normally distributed with a mean of 100 and a standard deviation of 30. Likewise, the daily demand for luxury rooms will be normally distributed with a mean of 30 and a standard deviation of 5. Furthermore, the demands have a 30% correlation. If demand for either type of room exceeds the availability, the customer is lost to another hotel. (None of the customers for regular rooms will pay for luxury rooms and none of the luxury room customers will want to take a regular room.) The demand should be rounded to the nearest non-negative whole number. To do this use the formula “=ROUND(A1,0)” to transform the fractional demand value in cell A1, for example, to the nearest non-negative whole number. RollerDice first wants to evaluate the plan of having 100 regular rooms and 50 luxury rooms. RollerDice would like to know what its expected profit under this room allocation and also how likely it is to lose one or more customers because the desired type of room (regular or luxury) is not available.