George and Jane Forrester, owners

George and Jane Forrester, owners

[ENTER REPORT TITLE INCLUDING THE NAME OF THE BUSINESS BEING ANALYSED]

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George and Jane Forrester, owners

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Introduction

(2 marks)

Include:

Write this after you have a clear understanding of the content of your report.
There is no word limit, just ensure you have explained what the report will contain.  As a guideline, one or two paragraphs will be sufficient.

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1.  Winning with wine tours?

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Write a report-style discussion of the main results of your analysis in Appendix 1. You may use subsections, tables etc. as you see fit.

Quote your results but do not include numerical calculations. These should be placed in Appendix 1.

(6 marks)

Discuss the results of your break-even analysis from Appendix 1. Include a copy and comment on your break-even graph for the preferred option. You should discuss your analysis of the two transport options if The Treetop Retreat organise and run the tours themselves. Your recommendation should relate to the expected number of passengers per tour.

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[Click here and insert your report-style discussion of the matters addressed in Appendix 1]

2. Optimum mix of treehouse reservation packages

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Write a report-style discussion of the main results of your analysis in Appendix 2. You may use subsections, tables etc. as you see fit.

Quote your results but do not include numerical calculations. These should be placed in Appendix.

(6 marks)

Summarise the aim of the section, and include clear answers to the questions addressed in Appendix 2. 

Describe your linear programming solution and discuss the results of your sensitivity analysis. Avoid using technical terms (e.g. shadow price, binding constraint etc) as much as possible, focusing instead on practical meaning of your results.

Is it optimal for The Treehouse Retreat to offer all three types of reservations? Make recommendations as appropriate.

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[Click here and insert your report-style discussion of the matters addressed in Appendix 2]

3. Who relies on online reviews?

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Write a report-style discussion of the main results of your analysis in Appendix 3. You may use subsections, tables etc. as you see fit.

Include your results but do not include numerical calculations. These should be placed in Appendix.

(4 marks)

Summarise the aim of the section, and include clear answers to the questions addressed in Appendix 3.

Include a copy of your 100% stacked column chart and comment on its key features.

Use results of the probability calculations to explain the importance of online reviews to potential guests. Are there any age groups that stand out?

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[Click here and insert your report-style discussion of the matters addressed in Appendix 3]

Conclusions and Recommendations

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(2 marks)

Conclusions:

Recommendations:

There is no word limit. As a guideline, one to three paragraphs will be sufficient.

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Appendix 1 (16 marks) Winning with wine tours?

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Include full details of your working out in this appendix.

Guests staying at the The Treetop Retreat frequently ask about ways in which they can visit the nearby Margaret River wine region and surrounding attractions. George and Jane think this could be a profitable way in which to add to their income stream and are considering adding wine tours to their offering.

Jane is considering bus tours of three local wineries and some of the region’s tourist attractions. Tour companies in the region charge $105 per person for similar wine tours. Jane wants to see if a similar pricing scheme will work for The Treetop Retreat. She predicts that, on average, there will be eight passengers per tour and will base her decisions on this number.

Each of the wineries charge a tasting fee of $5 per person, but Jane believes that she can negotiate a 25% discount with each winery, based on bringing in more potential customers. Meals will be provided along the way at a cost of $32 per person. Jane estimates that the total distance travelled for the tour will be 140 km and is exploring options for providing transport.

  • (4 marks) The first option is to hire a minibus and driver from a local company. A twelve-seater minibus, with driver, can be hired for $590. Calculate the break-even number of passengers, entering your working out in EXCEL or Word. Would a profit or loss be made if eight people were on the tour? Calculate the profit or loss amount.
  • (6 marks) An alternative option is to hire a minibus from a local company. The daily rate is $80 for a twelve-seater minibus. The minibus is supplied with a full tank of fuel and must be returned with a full tank at the end. The first 100 km is included; thereafter it costs 20 cents per kilometre. The minibuses in the fleet have a fuel consumption of 12.6 L/100 km. The bus will be driven by George, or one of the other employees of The Treetop Retreat at a cost of $245 per tour. Would you expect the break-even number of passengers in this scenario to be greater or fewer than in the first scenario? Give clear reasons for your answer. Calculate the new break-even number of passengers. Use a fuel price of $1.75 per litre in your calculations. What is the profit or loss if eight people are on a tour?
  • (6 marks) For the better option, illustrate the break-even point using an Excel graph. Include a copy of your EXCEL graph in this Appendix. On your graph, identify the region corresponding to profits and the region corresponding to losses.

EXCEL Instructions: Create a column called Number of passengers and in that column enter values from 0 to 20 in increments of 1. Then create two more columns, one for Total Cost and another for Total Revenue. Enter appropriate formulae in EXCEL to obtain the total cost and total revenue corresponding to each value in the Number of passengers column. Highlight the resulting three sets of numbers and go to Insert à Charts àScatter to obtain a graph. Make sure that your graph has been labelled appropriately (i.e. title, axis labels, legend) and that your chart title includes your network ID (this is the first part of your uni email address, e.g. bloggsj002).

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Appendix 2 (16 marks) – Optimum mix of treehouse reservation packages

Highlight and delete the question text below before submission, but retain the questions labels, e.g.  (a), (b)

Include full details of your working out in this appendix.

George and Jane are thinking of introducing three reservation packages: Standard, Deluxe and Premium. Guests who choose a Deluxe package would be entitles to a free breakfast and have priority access to the newly installed wood fired spa. A Premium package would also include a free breakfast and priority access to the spa, plus a free wine tour. With 6 treehouses in total and assuming full occupancy, the maximum number of bookings per month is 180. Based on estimated demand, George and Jane would expect at most 150 Standard reservations per month, and a maximum of 30 Premium reservations per month. They would like to limit the total number of Deluxe and Premium reservations to 60. Each Standard reservation is expected to generate a profit of $25. Profits per night for Deluxe and Premium reservations are $35 and $40, respectively. George and Jane interested in maximising the monthly profit.

  • (4 marks) Formulate a linear programming model for The Treetop Retreat. In doing so, clearly indicate the following:
  • What are the decision variables? Define them precisely.
  • What is the objective? Using your decision variables, formulate the objective function.
  • What are the constraints? Using your decision variables, formulate these constraints.
  • (3 marks) Use EXCEL Solver to obtain a solution to the linear programming model from part (a), together with an Answer Report and a Sensitivity Report. Provide a copy of your EXCEL spreadsheet and of the two Solver reports in this Appendix.

EXCEL Instructions: All EXCEL output should bear your e-mail ID. To ensure this, you will need to save your EXCEL file as ‘E-mail ID The Treetop Retreat.xlsx’ BEFORE you run Solver. In addition, your constraint names should begin with your initials, e.g. MK_Total bookings.

Refer to Activity 4D and 4E for detailed instructions on how to set up your spreadsheet and use Solver. You can set up your own spreadsheet, or use the LP Solver template, available from the course learnonline website.

  • (3 marks) Suppose that the profit per Premium reservation turns out to be $38 instead of $40. Would the solution obtained in part (b) still be optimal? Which of the Solver reports helps you answer this question and how? How would the solution change, if at all? Explain briefly and include a copy of your new Answer Report ONLY, if needed to describe the outcome of the proposed change.
  • (3 marks) Return all parameters to their values from part (b). What if the profit per Deluxe reservation turns out to be $45 instead of $35? Would the solution obtained in part (b) still be optimal? Which of the Solver reports helps you answer this question and how? How would the solution change, if at all? Explain briefly and include a copy of your new Answer Report ONLY, if needed to describe the outcome of the proposed change.
  • (3 marks) Return all parameters to their values from part (b). Suppose that The Treetop Retreat increases the limit on Deluxe and Premium packages combined to 80. Would the solution obtained in part (b) still be optimal? Which of the Solver reports helps you answer this question and how? Explain briefly and attach your new Answer Report ONLY, if needed to describe the outcome of the proposed change.

Appendix 3 (8 marks) – Who checks online reviews?

Highlight and delete the question text below before submission, but retain the questions labels, e.g.  (a), (b)

Include full details of your working out in this appendix.

We all pay attention to reviews – both good and bad. A survey of TripAdvisor users[1] has revealed that online reviews remain a trusted source of information when booking trips. For accommodation bookings, 81% participating travellers reported reading reviews always or frequently before booking a place to stay. Moreover, many customers place guest ratings higher than a brand name and are willing to pay a bit more for positive guest reviews. This creates opportunities for independent accommodation businesses, and it is subject of extensive industry research.

In a recent survey, respondents were asked whether guest reviews are a deciding factor when choosing accommodation. Responses (Yes/No) of 700 randomly selected travellers have been summarised in the following table (Table 1):

GenerationYesNoTotal
Boomers (58-67 years old)44106150
Gen X (42-57 years old)9575170
Millennials (26-41 years old)16436200
Gen Z (10-25 years old)14634180
Total449251700

Table 1: Summary of responses to the survey question about using guest reviews.

  • Use EXCEL to obtain a 100% stacked column chart for the data from Table 1. Include a copy of your chart in this Appendix.

EXCEL Instructions:

Refer to Activity 5C for instructions on how to obtain 100% stacked column chart. Please make sure that the title of your chart ends with your network ID (e.g. Survey question responses by generation bloggsj001).

  • What is the probability that a respondent uses guest reviews to decide whether to book accommodation? Include an appropriate probability statement with your calculation.
  • What is the probability that a respondent uses guest reviews as a deciding factor when looking for a place to stay, if they are:

Include an appropriate probability statement with each calculation.


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