Question

Rest Inn provides four-star accommodations for the vacation traveler. It is located just off a major interstate freeway. There are three other competing motels at the same exit. Hotel management is preparing its budget for the busiest three month period of the year, June through August. To differentiate themselves from the competition, Rest Inn provides a complimentary spa package for each guest stay that includes specialty shampoo, conditioner, soap, lotion, toothpaste, lavender essential oil, slippers, earplugs, and a sleep mask. Rest Inn purchases the spa package from a local vendor that puts the Rest Inn private label on the products. The hotel follows a policy of purchasing enough spa packages to ensure that 40% of next month's bookings are in the current month's ending inventory. Rest Inn's sales budget for guest stays for the next quarter is as follows:

Answer 1

Rest Inns ensures that it should contain Spa Packages at the end of month = 40% of next month's booking

July Opening Spa package would be = 40% of July booking = 2,350 * 40% = 940 Spa Package

July Closing Spa package would be = 40% of August booking = 1,950 * 40% = 780 Spa Package

Spa Packages to be used in July = 2,350

Hence, Rest Inn should purchase = Closing + Consumption - Opening = 2,350 + 780 - 940 = 2,190 spa packages in July.