Currently the hotel has 450 rooms with the following history:
Each market segment has its own price/demand elasticity. Estimates are:
This means, for example, that a 1% decrease in the price of a standard room will increase the number of rooms sold by 3%. Similarly, a 1% increase in the price will decrease the number of rooms sold by 3%. For any proposed set of prices, the projected number of rooms of a given type sold can be found using the formula:
The hotel owners want to keep the price of a standard room between $70 and $90, a gold room between $90 and $110, and a platinum room between $120 and $149. All prices are in whole dollar increments (discrete). Although the rooms may be renovated and reconfigured, there are no plans to expand beyond the current 450-room capacity.