You are required to develop a spreadsheet-based decision model that can be used to investigate and explore
decisions and risks relating to hotel booking management (and reservation limits). The model should be
designed to be used by the hotel sales manager for accommodation reservation bookings made by
customers for the coming high season. You can assume the following:
• The number of available rooms is limited
• Cancellations are expected
• The hotel’s policy for overbooking is to give customers a free room at another hotel
• Some limits on the number of possible reservations are expected (to handle overbooking).
The decision model must be realistic and easy to use. The level of complexity modelled, for example the
choice of deterministic vs. stochastic inputs, input distributions, etc., is left to your discretion. However, the
model must enable the user to input the business costs such as maintenance cost, overbooking cost, etc.
No data are provided for this assignment. You are required to create a fictitious client and demonstrate the
utility of the decision model using real data where available and create data where it is not.
The minimum requirements of the decision model are:
- The ability to enter revenue and costs, so that decision options can be explored and to enable
outputs, such as profit, to be calculated. - Stochastic treatment of some of the inputs, so that the resulting simulated output can be explored.
- It must also enable the decision maker to explore and understand the risks associated with decision.
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