As operations manager of Holz Furniture, you must make a decision about adding a line of rustic furniture. In discussing the possibilities with your sales manager, Steve Gilbert, you decide that there will definitely be a market and that your firm should enter that market. However, because rustic furniture has a different finish than your standard offering, you decide you need another process line. There is no doubt in your mind about the decision, and you are sure that you should have a second process. But you do question how large to make it. A large process line is going to cost $400,000; a small process line will cost $300,000. The question, therefore, is the demand for rustic furniture. After extensive discussion with Mr. Gilbert and Rosalita Ferrera of Ferrera Market Research, Inc., you determine that the best estimate you can make is that there is a two-out-of-three chance of high demand resulting in $625,000 profit from sales and a one-out-of-three chance of low demand resulting in $325,000 profit from sales. With a large process line, you could handle the high figure of $625,000. However, with a small process line you could not and would be forced to expand (at a cost of $125,000), after which time your profit from sales would be $525,000 rather than the $625,000 because of the lost time in expanding the process. If you do not expand the small process, your profit from sales would be held to $400,000. If you build a small process and the demand is low, you can handle all of the demand. The best option is to open a with an expected value of $ (round your response to the nearest whole number).

In addition to added room revenue and potential costs, what are other factors Tonya should consider as she makes this overbook/no-overbook decision for her hotel?

Design Within Reach (DWR) Design Within Reach (DWR) is one of the leading hardwood furniture manufacturers. While DWR has many small competitors, none of them controls a significant market share. Like most furniture manufacturers, DWR sells its products to a wide variety of small furniture stores, none of which represents a large percentage of DWR's sales. DWR can choose among many wood (an undifferentiated commodity) suppliers to find the best price and delivery. The growth rate of the hardwood furniture industry has slowed considerably in recent years. Many consumers purchase "IKEA type" furniture made of composite wood, which is substantially less expensive than hardwood furniture. The level of direct competition in the hardwood furniture industry can best be described as moderate because the slowing growth rate offsets the numerous firms in the industry. low because of the numerous firms in the industry and the slowing growth rate low because of the slowing growth rate and the…