Holiday Resort case - In planning to build a new hotel in...

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In planning to build a new hotel in Sanibel Island, Florida there are many factors that can determine if this would be a successful investment or not. The recent economic recession and the BP oil spill can play a major part in this decision and has raised some tough question regarding the tourism industry especially in the southern part of the country. To figure in what capacity would work best in building this new hotel, I have constructed a decision model developed in an excel spreadsheet to assist in making the greatest choice. After analyzing the data, we have noticed some important information that would be vital to discuss. Assuming an optimistic future with a high demand of tourism, to achieve the most optimal payoff we have concluded that building with 120 rooms would be the best. In contradiction, assuming a pessimistic future, where the demand is low we have concluded that building with the minimum 50 rooms would be the best choice. To avoid regret, by selecting one alternative over the other we attempt to select the decision alternative that minimizes the maximum regret. According to our analysis 80 rooms would do this appropriately.
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