Posted: August 4th, 2023

Rene was adamant. “If we have to tell customers we overbooked

Rene was adamant. “If we have to tell customers we overbooked and there’s no seatingavailable, they are going to be extremely angry. I’ll bet it costs us $150 per couple in goodwill eachtime.” Tom replied, “No way, it doesn’t cost us a penny. We’re so popular now it doesn’t matter if onepotential customer doesn’t come back. What matters is getting the most profit out of each seating. Weprep everything ahead of time, so it costs us $50 per couple for food whether they show up or not, andwe charge $150 per couple. At that rate of profit I don’t want to see a single empty table.”The restaurant Chez Rogat was run by two Owen grads. They had two seatings each night, 6:00P.M. and 8:30 P.M., for their 30-table restaurant. They prepared the same meal for everyone at eachseating. Due to their popularity, they always had more reservations than they could handle andreservations were made far in advance. They had few no-shows, but did have some. They had about anequal chance of either 0, 1, 2, or 3 couples as no-shows at any given seating.Given their costs, calculate an overbooking policy for Chez Rogat. Would you recommend anyother capacity management strategy?200 words

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