(Solution Download) If you are not familiar with Priceline com Inc go to


If you are not familiar with Priceline.com Inc., go to its Web site. Assume that an individual ?names a price? of $70 on Priceline.com for a room in Dallas, Texas, on August 24. Assume that August 24 is a Saturday, with low expected room demand in Dallas at a Marriott International, Inc., hotel, so there is excess room capacity. The fully allocated cost per room per day is assumed from hotel records as follows:
Housekeeping labor cost* ........ $ 34
Hotel depreciation expense ......... 42
Cost of room supplies (soap, paper, etc.) ... 6
Laundry labor and material cost* ...... 10
Cost of desk staff .............. 5
Utility cost (mostly air conditioning) .... 4
Total cost per room per day ....... $101
*Both housekeeping and laundry staff include many part-time
workers, so that the workload is variable to demand.

Should Marriott accept the customer bid for a night in Dallas on August 24 at a price of $70?

 







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