Port Aransas Resort Company (PARC) has bought a prime parcel of beachfront property and plans to build a luxury hotel. After meeting with the architectural team, the owners have drawn up some information to make preliminary plans for construction. Excluding the suites, which are not part of this decision, the hotel will have four kinds of rooms: beachfront non-smoking, beachfront smoking, lagoon view non-smoking, and lagoon view smoking. In order to decide how many of each of the four kinds of rooms to plan for, the owners will consider the following information. • After adjusting for expected occupancy, the average nightly revenue for a beachfront non-smoking room is $190. The average nightly revenue for a lagoon view non-smoking room is $170. Smokers will be charged an extra $15.
• Construction costs vary. The cost estimate for a lagoon view room is $19,000 and for a beachfront room is $20,000. Air purifying systems and additional smoke detectors and sprinklers add $3,000 to the cost of any smoking room. PARC has raised $6.3 million in construction funds for this portion of the building.
• There will be at least 100 but no more than 180 beachfront rooms.
• Design considerations require that the number of lagoon view rooms be at least 1.5 times the number of beachfront rooms, and no more than 2.5 times that number.
• Industry trends recommend that the number of smoking rooms be no more than 25% of the number of non-smoking rooms.
A. Develop the linear programming model to maximize revenue
B. Solve the LP model in Excel and submit your work including the reports.
C. What is the solution?
D. PARC is a little surprised at the results. Even though industry statistics show that the number of people requesting smoking rooms has declined, they feel that they may need more smoking rooms. Without re-solving the problem in Excel, how can they use the reports to determine the effect that adding more smoking rooms would have on their revenue?