MSOA coursework topics
Part I: Hotel Overbooking Assignment (40%)
During the past tourist season, CFT hotel in Edinburgh did not achieve any high occupancy despite
using a new reservation system. Apparently, potential guests were making reservation that for some
reasons they failed to honour. A review of front-desk records during the current peak period, when the
hotel was fully booked revealed the number of no-shows that is given in Table below. The room that
remains vacant because of no-show results in an opportunity loss of the £40 room contribution. Marian
Linkoln manager of the CFT hotel is considering an overbooking strategy. According to this strategy,
if a guest holding reservation is turned away because of overbooking, then other costs are incurred. CFT
has made arrangement with a nearby hotel to pay for the rooms of guests whom cannot accommodate.
Further, a penalty is associated with the loss of customer goodwill and the impact this has on future
business. Marian has estimated this loss to be approximately £100 for each guest directed to nearby
hotel. A good overbooking policy should strike a balance between the opportunity cost of vacant room
and the cost of not honouring a reservation. Develop a stochastic discrete event simulation model in
Excel and use it to assess the “expected cost” of various scenarios made by changing the reservations
overbooked. The reservations overbooked to consider are 0, 1, 2,... and 7.
Note: As a measure of performance, you need to calculate the “expected cost” (i.e., the probabilistic
cost which might be calculated as e.g., the cost of no-show/overbooking × probability of number of noshows).
You should produce a report to advise Marian Linkoln, manager of the CFT hotel. This report should
consist of four sections:
A short executive summary (10 marks)
This should provide a summary of the results and a concise suggested plan of action.
Model Description (40 marks)
A suitable description of the model is one that would allow the manager to implement the model himself
but also provide the more general structure to verify the finer details are correct. The description should
not include details of Excel formulae as Marian may wish to implement the model in some other way.
It could include mathematical formulae where appropriate.
Results (30 marks)
This section should give more detailed results that were used to suggest a plan of action in the Executive
Summary. The meaning/interpretation of the results should also be discussed. Comment on the validity
of your results.
Assumptions, Limitations and Future Work (20 marks)
This section of the report is, again, for Marian. He will use the information presented to determine
whether the model should be used now or in the future. He may also commission further development
of the model if the future work is deemed of value.
No-shows Probability
0 0.07
1 0.19
2 0.22
3 0.16
4 0.12
5 0.10
6 0.07
7 0.04
8 0.02
9 0.01
Part II: National Cranberry Cooperative (NCC) Assignment (60%)
It is now 1975 and the percentage of water-harvested berries has increased to 80%. Since 1971 and
over the years some changes have been made in RP1 to address the issues faced by the facility manager
but the issues of truck queuing and excessive overtime are still persisting. Hugo Schaeffer has asked a
consultancy firm to evaluate a new proposal. According to the proposed plan, the process line for wet
and dry berries will be separated. To do so, a new line to receive and process only wet berries will be
constructed. The old RP1 though may still receive and process limited amount of wet berries if
necessary. In the wet berries process line new machines will replace the Dechaffers and Dryers; the
combined machines operate at a far faster rate of 10 bbl per minute. Over the years the landscape of
the land surrounding the facility has changed and if the construction of the new line to process wet
berries receives green light, there will be limited space for trucks to queue for unloading berries. The
space is likely to allow only 10 trucks to line up at any time during the 12 hours of daily operations.
Only one truck at a time can unload its berries. A truck unable to queue is “rejected” and may go to the
old RP1 to unload its berries. The NCC is expected to sign an agreement with the growers to pay a
compensation fee according to the number of trucks being “rejected” and the length of each truck
waiting time. The arrival rate of trucks is known not to follow any daily pattern and could be modelled
using a Poisson process. According to the new production line supervisor, Madeline, for each truck on
average it takes between 6 and 11 minutes, uniformly distributed, to unload. The average arrival rate of
the trucks is 10 (trucks per hour).
a) Develop a stochastic discrete event simulation model in Excel and use it to evaluate the new proposal.
b) Some data on the number of trucks and the number of barrels per truck has been collected and can
be found in the attached Excel file. Repeat the experiment assuming truck unloading time is a function
of truck delivery per bbls. You may use the following expression
450
where TL is the volume of the berries delivered by a truck.
You should produce a report to advise Hugo Schaeffer, vice president of operations at National
Cranberry Cooperative. Hugo Schaeffer is also like to see your possible suggestions that could improve
the proposed plan.
This report should consist of four sections:
A short executive summary (10 marks)
This should provide a summary of the results and a concise suggested plan of action.
Model Description (40 marks)
A suitable description of the model is one that would allow the manager to implement the model himself
and also provide more general structure of the model. The description should not include details of
Excel formulae as Hugo Schaeffer may wish to implement the model in some other way. It could include
mathematical formulae where appropriate.
Results (30 marks)
This section should give more detailed results that were used to suggest a plan of action in the Executive
Summary. The meaning/interpretation of the results should also be discussed. Comment on the effect
of changing the way a truck unloading time is estimated.
Comment on the validity of your results.
Assumptions, Limitations and Future Work (20 marks)
This section of the report is, again, for Hugo Schaeffer. He will use the information presented to
determine whether the model should be used now or in the future. He may also commission further
development of the model if the future work is deemed of value.
Note: Names in the above assignments are fictional and reference is neither made nor implied
to any specific individual or organization.
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