# hw3a - nights The agent gets a 10 kickback for the booking...

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ISyE 4803B – Supply Chain Economics Homework 3 1. Suppose there are two fares: full=\$600 and discount = \$400. If demand for full fare is normally distributed with mean of 60 and standard deviation of 20, and capacity is 100 seats, what should the booking limit be? What should the protection level of full fare be? 2. Suppose instead of normally distributed demand in problem 1, the demand is uniformly distributed on [35, 75], repeat your answer for 1. 3. How does the booking limit change as the discount fare goes up relative to the full fare? How does the booking limit change as the variation in full fare ( certeris paribis ) goes up? 4. Suppose the booking limits for classes 1 to 4 are 100, 80, 70, and 30. What are the corresponding protection levels? 5. Ms. Smith reserves a room through a travel agent at a hotel for \$50 per night for 3
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Unformatted text preview: nights. The agent gets a 10% kickback for the booking per day. In addition, she pays \$8 per day for internet connection and drinks two bottles of vodka from the minibar each night at a cost of \$7 each (the cost to the hotel for each is \$1 and \$2 respectively). The transaction cost for the booking is \$10, and the cost to the hotel of upkeep of the room is \$6 per day. Compute the incremental cost, ancillary contribution, and net contribution for the hotel. 6. Suppose the initial booking limits for 5 classes are 100, 73, 12, 4, and 0. Update the booking limits (and state whether to accept or reject for the following sequence of requests) a. 2 seats in Class 5 b. 5 seats in Class 2 c. 1 seat in Class 2 d. 1 seat in Class 4 e. 3 seats in Class 3 f. 4 seats in Class 3 g. 2 seats in Class 3 h. 4 seats in class 3...
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