Case Study-4

A local travel agent is planning a charter trip to a famous sea resort. The eight-day seven-night package includes the round trip fare, surface transportation, boarding and lodging and selected tour options. The charter trip is restricted to 200 persons and past experience indicates that there will not be any problem in arranging 200 passengers. The problem faced by the travel agent is to determine the number of Deluxe Standard and Economy tour packages to offer for this charter. All three of these plans each differ in terms of their seating and service for the flight, quality of accommodation, meal plans and tour options. The following table summarizes the estimated prices of the three packages and the corresponding expenses of the travel agent. The travel agent has hired an aircraft for a flat fee of Rs. 2,00,000 for the entire trip. Per person price and costs for the three packages are as follows:

Tour Plan Deluxe Standard Economy

Price (Rs.) 10,000 7,000 6,500

Hotel Costs (Rs.) 3,000 2,200 1,900

Meals and Other Expenses (Rs.) 4,750 2,500 2,200

In planning the trip, the following considerations must be taken into account: (i) (ii) (iii) (iv) (v) At least 10 percent of the packages must be of the deluxe type Al least 35 percent but not more than 70 percent must be of the standard type At least 30 percent must be of the economy type The maximum number of deluxe packages available in any aircraft is restricted to 60 The hotel desires that at least 120 of the tourists should be on the deluxe standard packages together

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The travel agent wishes to determine the number of packages to offer in each type of trip so as to maximize the total profit. (a) Formulate this problem as a linear programming problem (b) Restate the above linear programming problem in terms of two decision variables, taking advantage of the fact that 200 packages will be sold (c) Find the optimum solution using Simplex Method for the restated linear programming problem and interpret your result

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