The Endless Point Rest is a popular and friendly family coastal resort

Word limit – 1500 words this is a maximum no minimum word count is required to be met Contribution to assessment 20% You are expected to supply a professional report as would be expected in the workplace. A 10% penalty (reducing the overall mark) will be applied where answers are difficult to access or identify due to poor presentation related to either stylistic or technical reasons. This assignment assesses your ability to calculate and interpret data plus how this may feed into management plans or strategies. Take carful note of the marks allocated for each part as a guide to the effort required to provide a sufficient answer that part. For each question, the textbook provides a comparable worked example that will assist you to construct your answers. See also the online videos available at the Moodle site. Instructions – Choose to answer any two questions (from a choice of five). – Format is open you may submit using MS Word, MS Excel or use both (or other similar software). – Each question contributes 10% towards assessment in the unit/course. – Submit online at the unit/course site. – Multiple files are allowed (e.g., MS Excel file and MS Word file). It is recommended that you use MS Excel exclusively€”though take care to make the final answer to each part obvious to the marker. Pick TWO Question 1 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 €œif 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. €œMa 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. €œI can do some calculations and work out a plan but we need to overbook!€ €œI don’t know Emmet€ says Pa, €œwe 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. € €œLeave that to me€ replies Emmet. Emmet’s research has profiled no shows based on a year (365 days) of records: Booking no shows (# rooms) Emmet has estimates that every no show is a loss if $73 per room per night. So he makes a deal with Billy-Bob, the manager of Lucky Zest resort. €œBilly-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. €œOk, 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. Tasks: (Total 100 marks) 1. Calculate the expected opportunity loss per night sustained by The Endless Point Rest. (15 marks) 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. (30 marks) 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. (15 marks) 4. Prepare a 50 word (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? (40 marks)

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