“Management Science &amp

System"The cost of the rooms was £120 per room per night. They would book the accommodation but if they found out a week in advance that they were not going to make the trip, they would cancel at a cost of 10% of the total value. If they cancelled one (1) to three (3) days in advance then the charge would be 50% and on the day 100%. The Reservations manager who was pretty new did not know how to handle situations like these and so he flatly refused to accept the booking or to give it any further thought. The hotel was already 60% booked for two of the days when the group wanted to stay. All the other days were below 50%. The group required 42% of the rooms which meant that there would have been an excess demand of a mere 2%.
This case is considered of major importance because in a few months the Olympic Games will be in London and similar situations may arise during that period. Managers are required to make decisions everyday. It is important that when matters arise that they are analysed properly before actions are taken. Pearce and Robinson (1997) states that one of the critical tasks of strategic management is to: “identify the most desirable options by evaluating each option in light of the company’s mission.” One of the roles of management is to make decisions and there are a number of models that are available to assist in this process. One such method is decision analysis which uses a construct called a decision tree to analyse situations. According to Lucey (1992, p27) a decision tree is: “A pictorial method of showing a sequence of inter-related decisions and outcomes. All the possible choices are shown on the tree as branches and the possible outcomes are subsidiary branches.”
Another model of major significance is linear programming – a mathematical technique. “Linear Programming has helped to bridge the gap between abstract economic theory and managerial decision making in practice” (Koutsoyiannis, 1979). It is normally used in