You are managing the Killington Inn, a ski lodge dedicated to the needs of skiers in the central Vermont ski complex (the mountains of Killington, Okemo, etc.). Each year the Inn advertises and sells weekend ski packages that include two nights lodging (Friday, Saturday) plus unlimited skiing for two at all nearby mountains. The packages sell for $459 if booked early and $599 if booked late. The Inn currently has 30 rooms available for these weekend ski packages. Demand for late bookers (class 1) follows a Poisson distribution with mean L = 20. Calculate the optimal protection level for class 1 using Littlewood’s two‐class model.
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