Gu (2003) applied the single-period inventory model to estimate the optimal room
capacity for Las Vegas Strip casino hotels form 2001 to 2004. In his study, Cu was defined as income before corporate taxes per room night sold; and Co was fixed cost per room night available. From a trend regression model for demand forecasting, the future mean demand for each year and the standard deviation were obtained. This information was combined with the Cu/(Cu+Co) ratio to estimate the optimal room nights available for each year. Gu (2003) found that the Las Vegas Strip casino hotels would experience over-capacity from 2001 to 2003, and under-capacity in 2004.