As communicated, the Round Tree Manor offers three rental class with the following

estimated demand:

Rental Class Demand

estimate
Super Saver 120
Deluxe 65
Business 40

As indicated, there are two room types are available for allotting the above-
mentioned Rental classes

Room Type Available

Rooms
Type I 105
Type II 115

Given below is the contribution of each room type to a rental class

Room Type / Rental Super Deluxe Busines

Class Saver s
Type I $35 $37 NA
Type II $24 $34 $43

The goal is to optimize the net total contribution by efficient allocation of the
appropriate room type to the rental class.
However, there is a limitation on the available number by the room types.
Hence, it is critical to optimize the allotment within the given constraint.

Solution:
Super Saver rooms allotted to Room Type I : 105
Deluxe rooms allotted to Room Type I :0
Super Saver rooms allotted to Room Type II : 10
Deluxe rooms allotted to Room Type II : 65
Business rooms allotted to Room Type II : 40

The demand for 5 rentals Super Saver rental class is not satisfied
If we see the total demand estimated across all the rental types is 225
However, the total number of available room types are only 220
Hence there is a shortage of 5 rooms at an overall level. And since Super Saver
yields the least minimum contribution, the linear programming did not satisfy the 5
additional rentals of Super Saver to maximize the overall contribution.
Total Reservations accepted in each of the rental class:

Rental Class Total Estimated

Allocated forecast
Super Saver 115 120
Deluxe 65 65
Business 40 40

As per the optimum solution, there are 10 Super Savers, which are allotted the
Room Type II (where the yield is only $24 compare to that produced by deluxe of
$34)
If we convert these Super Saver (allotted in Room Type II) we stand to gain $10 per
room, while the cost to us is only $5.
However, we should not convert the number of Super Savers by more than 10,
because post that yield realized by converting into Deluxe drops and hence not
viable for the expenditure to be incurred.
If an unused office area can be converted into a room, for the given demand I would
prefer to convert into Room Type I as the yields for Super Saver and Deluxe rental
class is higher in Room Type I. Since there are 5 unmet Super Saver class,
converting the unused office into Room Type I will fetch us a yield of $35.
The current LP model can be modeled to plan for the allocation of the rental
demand for the next night. All that needs to be changed is only the number of
rooms available and the new estimated demand across the rental classes.

Linear Programming Model:

Decision Variables
S1 : Number of super saver rental class allotted with Room Type I
S2 : Number of super saver rental class allotted with Room Type II
D1 : Number of deluxe rental class allotted with Room Type I
D2 : Number of deluxe rental class allotted with Room Type II
B2 : Number of business rental class allotted with Room Type II
SM : Number of missed out super saver rental class
DM : Number of missed out deluxe rental class
B2 : Number of missed out business rental class
Model:
Objective Function
Maximize 35*S1 + 24*S2 + 37*D1 + 34*D2 + 43*B2 // Maximizing the total net
Contribution

Constraints:
S1 + D1 <= 105 // Total number of Room Type I is max of 105
S2 + D2 + B2 <= 115 // Total number of Room Type II is max of 115
S1 + S2 + SM = 120 // Total demand of Super Saver rental class is
120
D1 + D2 + DM = 65 // Total demand of Deluxe rental class is 65
B2 + BM = 40 // Total demand of business rental class is 40
S1, S2, D1, D2, B2, SM, DM, BM >= 0 // Non-negative solution values