Inn at Penn has 200 rooms. For regular-fare customers, rooms are priced at $300 per night while the

A. Protection level for the high fare to be maximized expected revenue is 40 as there is less probability for last minute customers to turn up to the INN.

B. As the protection level is 80 rooms for high fare customers i dont think that any customer turned away because of unavailbility of rooms. Even is any customer turned back, the numbers shoul be very minimal.

C. The intelligent use of revenue management principles can be used to increase top line revenue and bottom line profitability in any service industry possessing the following characteristics:

1.

1. Demand for the service can be divided into clear market segments and sensitivity to

prices varies among the market segments.

2. The firm’s capacity is relatively fixed; it is expensive or impractical to add or subtract

inventory in the short run, though there may be some ability to shift it.

3. There is a time dimension to the provision of the service – once that time has passed, the inventory loses all of its value.

4. The cost of selling an additional unit of the existing capacity is low relative to the price of the service.

5. There is considerable flexibility to adjust prices quickly to reflect variations in the balance of supply and demand.

6. There are definite peaks and valleys in demand, which can be predicted, but not with a high degree of certainty.

If we sought maximum profit the protection level and optimal protection level increases as it come low sales with maximum profit as compare to High sales with low profit.