Assignment Task

Description

Purpose

This assignment task is aligned to the learning outcomes GLO1 & ULO1 and skills GLO4 & ULO3 required to build complex decision models and use advanced quantitative modelling techniques, such as optimisation, to analyse and develop solutions to business problems. By completing this task, you will develop your skills in conceptualising, formulating and representing a business problem as a spreadsheet‐based decision model, developing a business decision model using MS Excel, and undertaking scenario analysis, stochastic modelling, and risk analysis based on simulation modelling.

Context/Scenario

As the high season approaches, Hotel Paradise, a renowned beachfront resort, anticipates a surge in accommodation reservation bookings from eager vacationers. To ensure efficient management of this influx and capitalise on revenue opportunities, they are seeking your expertise in the development of a comprehensive decision model tailored for analysing and managing hotel booking operations. This model is intended to empower the Hotel Sales Manager in making informed decisions regarding accommodation reservations, pricing strategies, and associated risks, particularly focusing on the upcoming high season.

Ultimately, the successful deployment of this decision model will not only enhance Hotel Paradise`s competitiveness in the market but also elevate the guest experience during the high season. Through strategic decision‐making and risk management, the hotel is poised to achieve its objectives of maximising occupancy rates and daily profits, solidifying its reputation as a premier destination for discerning travellers.

Key features expected in the fully functional spreadsheet‐based decision model capable of accommodating fixed and stochastic inputs and generating actionable insights:

• Comprehensive booking management: Enable the Hotel Sales Manager to efficiently handle accommodation reservation bookings, considering factors such as room availability, pricing strategies, and refund
• Risk assessment: Incorporate mechanisms to identify and assess potential risks associated with booking management, such as overbooking, cancellations, and revenue
• Forecasting: Anticipate demand fluctuations, allowing proactive adjustments to booking strategies to optimise occupancy
• Profit maximisation: Recommend booking decisions that align with the overarching goal of maximising daily profits while ensuring customer satisfaction.
• User‐friendly and realistic: Design an intuitive decision model that facilitates ease of use for the Hotel Sales Manager, enabling quick access to relevant data, and decision‐support

Section 1: Spreadsheet‐based decision model 

Design a spreadsheet model that you can use to investigate the problem. The model should include the following:

• Fixed inputs g. Number of rooms, Housekeeping cost per room
• Stochastic inputs g. Daily reservations, Late cancellations, Daily miscellaneous expenses
• Decision variables g. Room rate, Overbooking rate, Late cancellation fee
• Calculated variables g. Number of occupied rooms, Sales revenue per day, Total cost per day
• Output variable(s) g. Sold out: Yes/No, Daily profit

Section 2: Scenario analysis 

This section relates to Topic 7 . Consider different scenarios for stochastic inputs and examine the impact on the outputs. Also, consider the sensitivity of the outputs to the decision variables.

Section 3: Stochastic modelling including choice of distributions

This section relates to Topics 8 and 9. Undertake stochastic modelling where each of the stochastic inputs is now random. This will require you to choose an appropriate distribution for each of the stochastic inputs and justify each one. Part of the justification required will come from examining the descriptive statistics of stochastic inputs.

Section 4: Simulated output distribution and risk analysis report

This section relates to Topic 9. This requires you to undertake a risk analysis based on simulation modelling, in order to quantify the risks associated with the given context.

Section 5: Report 

See the Assignment 2 Rubric at the end of this document and the Assignment 2 Report Template word document.

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