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    CH9 11 PDF

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    يوسف سعيد العنزي
    The document discusses three cases involving yield management and determining optimal inventory levels. Case A involves determining the maximum overbooking for a commuter airline. Case B involves determining the optimal number of rental cars to reserve at a discounted rate for a car rental company. Case C involves determining the optimal number of canoes to lease for a canoe rental business.

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    CH9 11 PDF

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    يوسف سعيد العنزي
    6 views3 pages
    The document discusses three cases involving yield management and determining optimal inventory levels. Case A involves determining the maximum overbooking for a commuter airline. Case B involves determining the optimal number of rental cars to reserve at a discounted rate for a car rental company. Case C involves determining the optimal number of canoes to lease for a canoe rental business.

    Original Description:

    3. Town and Country has experienced a substantial increase in business volume because of recent fare wars between the major air carriers. Town and Country operates a single office at a major international airport, with a fleet of 60 compact and 30 midsize cars. Recent developments have prompted management to rethink the company’s reservation policy. The table below contains data on the rental experience of Town and Country:

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    The document discusses three cases involving yield management and determining optimal inventory levels. Case A involves determining the maximum overbooking for a commuter airline. Case B involves determining the optimal number of rental cars to reserve at a discounted rate for a car rental company. Case C involves determining the optimal number of canoes to lease for a canoe rental business.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    6 views3 pages

    CH9 11 PDF

    Uploaded by

    يوسف سعيد العنزي
    The document discusses three cases involving yield management and determining optimal inventory levels. Case A involves determining the maximum overbooking for a commuter airline. Case B involves determining the optimal number of rental cars to reserve at a discounted rate for a car rental company. Case C involves determining the optimal number of canoes to lease for a canoe rental business.

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    You are on page 1of 3

    Group A/D

    A commuter airline overbooks all of its flights by one passenger (i.e., the ticket agent will take seven
    reservations for an airplane that has only six seats). The no-show experience for the past 20 days is
    shown below:

    Using the critical ratio P(d < x) ≤ Cu/(Cu + Co), find the maximum implied overbooking opportunity loss
    Co if the revenue Cu from a passenger is $20.

    Hint:
    1. Fill in the following table to determine the probabilities and P(d<x) values.

    No Shows Frequency Probability P(d  x)


    0 6 .30 0
    1 5 .25 .30
    2 4 .20 .55
    3 3 .15 .75
    4 2 .10 .90

    2. If you overbook by 1, then what is the maximum and minimum value of P(d<x)?
    P(d<x) must be between 0.3 and 0.55

    3. Given P(d<x) ≤ Cu/(Cu + Co) and Cu=$20, how can you utilize your results from Hint 2 to
    answer this question?

    20/(20+Co) = 0.3 → Co = $46.67

    This study source was downloaded by 100000750897288 from CourseHero.com on 06-18-2024 05:34:32 GMT -05:00

    https://www.coursehero.com/file/197905829/CH9-11pdf/
    Group B/E

    Town and Country has experienced a substantial increase in business volume because of recent fare
    wars between the major air carriers. Town and Country operates a single office at a major international
    airport, with a fleet of 60 compact and 30 midsize cars. Recent developments have prompted
    management to rethink the company’s reservation policy. The table below contains data on the rental
    experience of Town and Country:

    The daily demand appears to follow a normal distribution; however, it has been observed that midsize-
    car customers do not choose to rent a compact when no midsize car is available. The discount rate is
    available to persons who are willing to reserve a car at least 14 days in advance and agree to pick up
    that car within 2 hours after their flight arrives. Otherwise, a nonrefundable deposit against their credit
    card will be forfeited. The current reservation policy is that 40 compact cars are held for customers who
    are willing to pay the full rate and 25 midsize cars are held for full rate–paying customers. Using yield
    management, determine the optimal number of compact and midsize cars to be held for customers
    paying the full rate.
    Hint:
    1. Determine P(d<x) for compact and midsize cars using the formula: (F is Full price, D is Discount
    price).

    Compact: P(d<x) ≤ (30-20)/30 = 0.33


    Midsize: P(d<x) ≤ (40-30)/40 = 0.25

    2. You will determine the optimal number of compact and midsize cars using the following formula:
    Optimal number = μ + σ*z
    μ (Mean) and σ (Standard Deviation) are provided in the table above.
    Use the Table below and your results from Hint 1 to determine z. You may then calculate the optimal
    number.
    Compact: Optimal Number = 50 +(-0.43)(15) ~ 44
    Midsize: Optimal Number = 30 +(-0.68)(10) ~ 23

    This study source was downloaded by 100000750897288 from CourseHero.com on 06-18-2024 05:34:32 GMT -05:00

    https://www.coursehero.com/file/197905829/CH9-11pdf/
    Group C/F

    Joe operates a canoe rental service on the Gualala River. He currently leases 15 canoes from a
    dealer in a nearby city at a cost of $10 per day per canoe. On weekends, when the water is high,
    he picks up the canoes and drives to a launching point on the river, where he rents canoes to
    white-water enthusiasts for $30 per day. Lately, canoeists have complained about the
    unavailability of canoes, so Crazy Joe has recorded the demand for canoes and found the
    experience below for the past 20 days:

    Recommend an appropriate number of canoes to lease.

    Hint:
    1. Fill in the following table to determine the probabilities and P(d<x) values.

    Daily Frequency Probability P(d  x)


    Demand
    10 1 .05 0
    11 1 .05 .05
    12 2 .10 .10
    13 2 .10 .20
    14 2 .10 .30
    15 3 .15 .40
    16 3 .15 .55
    17 2 .10 .70
    18 2 .10 .80
    19 1 .05 .90
    20 1 .05 .95

    2. Given P(d<x) ≤ Cu/(Cu + Co), what are the values of Cu and Co?
    Cu = 30 – 10 = 20; Co = 10
    3. Determine the maximum value of P(d<x) using Hint 2. Utilize the Table in Hint 1 to determine
    the appropriate number of canoes.
    P(d<x) ≤ 20/(20+10) = 0.67 → 16 Canoes

    This study source was downloaded by 100000750897288 from CourseHero.com on 06-18-2024 05:34:32 GMT -05:00

    https://www.coursehero.com/file/197905829/CH9-11pdf/
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