Use the Following Information to Determine the Optimal Overbooking Policy

Multiple Choice

Use the following information to determine the optimal overbooking policy for a motel at a rural town in South Carolina. The motel's capacity is 30 rooms. The historic number of no-shows for a typical day, along with the probability of occurrence, is shown in the following table. The average profitability per room is $110, and the cost of lost goodwill per guest due to overbooking is approximately $60.

-Calculate the total expected profit with 31 reservations (which means 1 overbooking) .

A) $3,300.00
B) $2,886.00
C) $2,897.50
D) $3,213.50
E) $2,827.00