Bratt's Bed and Breakfast, in a Small Historic Prince Edward

question 52

Essay

Bratt's Bed and Breakfast, in a small historic Prince Edward Island town, must decide how to subdivide (remodel) the large old home that will become their inn. There are three alternatives: Option A would modernize all baths and combine rooms, leaving the inn with four suites, each suitable for two to four adults. Option B would modernize only the second floor; the results would be six suites, four for two to four adults, and two for two adults only. Option C (the status quo option) leaves all walls intact. In this case, there are eight rooms available, but only two are suitable for four adults, and four rooms will not have private baths. Below are the details of profit and demand patterns that will accompany each option. Which option has the highest expected value?
Annual profit under various demand patterns
$$\begin{array} { | l | l | l | l | l | } \hline & \text { Capacity } & \text { P } & \text { Average } & p \\\hline \text { A (Modernize all) } & \text { US } \$ 90,000 & 5 & \text { US } \$ 25,000 & 5 \\\hline \text { B (Modernize 2nd) } & \text { US } \$ 80,000 & 4 & \text { US } \$ 70,000 & 6 \\\hline \text { C (Status Quo) } & \text { US } \$ 60,000 & 3 & \text { US } \$ 55,000 & 7 \\\hline\end{array}$$

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Definitions:

Self-Esteem Components

The elements that contribute to an individual's overall sense of worth or value, including beliefs about oneself and emotional states.

Self-Awareness

The conscious knowledge of one's own character, feelings, motives, and desires, which can influence behavior and decisions.

External Locus of Control

A belief system where individuals think that their successes or failures result from external factors beyond their control.

Decisions

The process of making choices between alternative courses of action based on preferences, values, and available information.