Question

Little’s Law: Val d’Costa is a world famous ski village in the French Alps. Because of its popularity, the 1400 hotel beds in the village are always fully booked during the winter season. Skiers stay in Val d’Costa for 10 days on average.

a) How many new skiers arrive each day, on average, to the village?

b) A marketing study showed that skiers spend in local shops an average of $250 per person on their first day, pluw another $150 per person on each additional day of their stay. For next season, due to economic conditions, the average stay is expected to decline only 6 days, and there will be, on average, only 800 beds occupied each week. What will be the average daily spending in the village over the course of the next season?

Answer 1

(a): average flow time = 10 days

Average inventory = 1400 hotel beds

Thus, average inventory = average flow rate*average flow time

So, 1400 = average flow rate*10 days

Or average flow rate = 1400/10

= 140 skiers per day

(b): Average daily spending over the course of next season

= $250 + (6-1 days)*$150 per day

= 250 + (5*150)

= $1,000 per bed.

Now average daily spending in the village = $1,000 per bed*800 beds

= $800,000