Located in the heart of London, the Clonlara hotel is a large property with over 1000 rooms. The hotel reserves 60 rooms for high paying customers, leaving the remaining 1000 rooms for the public. Rooms typically sell for $500 a night on weekends to $800 a night during the week. Although the hotel has an upscale reputation, the hotel is rarely filled, especially on weekends.
The manager of the Clonlara Hotel, Elizabeth Crawley, must maintain an upscale clientele, in addition to achieving a high occupancy rate to be a successful business. In an attempt to remedy this dilemma, Crawley chose 50 weekends were a block of 400 rooms would be sold to an Internet discounter, leaving 600 rooms available for the hotel to sell. Rooms would be sold through the Internet discounter after 6 p.m. on Friday in an attempt to fill the hotel during the weekends, which typically were low. When a customer booked through the Internet discounter, the Clonlara hotel would receive $360. Unfortunately, on multiple occasions, customers willing to purchase a room at the $500 rate were declined. Crawley determined that the automatic 400 rooms being sold through the Internet discounter was no longer suitable based on the information she gather in Exhibit 1. The Internet discounter agreed to sell rooms in blocks of 100, allowing Crawley the opportunity to sell off a different number of rooms each weekend, depending on demand.
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