Hervis Car Rental in Austin,Texas,has 50 High-Performance Shelby-H Mustangs in Its

question 34

Essay

Hervis Car Rental in Austin,Texas,has 50 high-performance Shelby-H Mustangs in its rental fleet.These cars will be in greater demand than usual during the last weekend in July when the Central Texas Mustang Club holds its annual rally in Austin.At times like this,Hervis uses a revenue management system to determine the optimal number of reservations to have available for the Shelby-H cars.Hervis has agreed to have at least 60% of its Shelby-H Mustangs available for rally attendees at a special rate.Although many of the rally attendees will request a Saturday and Sunday two-day package,some attendees may select a Saturday-only or a Sunday-only reservation.Customers not attending the rally may also request a Saturday and Sunday two-day package,or make a Saturday-only or Sunday-only reservation.Thus,six types of reservations are possible.The cost for each type of reservation is shown here. The anticipated demand for each type of reservation is as follows: Hervis Car Rental would like to determine how many Shelby-H Mustangs to make available for each type of reservation in order to maximize total revenue.
a.Define the decision variables.
b.Formulate a linear programming model for this revenue management application.

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Definitions:

Targeted Customers

A specific group of consumers identified as the primary audience for a product or service, based on shared characteristics or needs.

Overall Strategy

A comprehensive plan detailing how a business or organization will achieve its goals and objectives.

Strategic Business Unit Level

A division or unit within a larger organization that operates with its own mission, vision, and objectives, and focuses on specific market segments.

Strategic Direction

The guidance provided by an organization to define its strategy and make decisions about allocating its resources to pursue this strategy.