Industrial Manufacturing Fall 2006

Monday, September 11, 2006

Forecasting Exercise

Southwestern University

Southwestern University (SWU), a large state college in Stephenville, Texas, enrolls close to 20,000 students. The school is a dominant force in the small city, with more students during fall and spring than permanent residents.
Always a football powerhouse, SWU is usually in the top 20 in college football rankings. Since the legendary Bo Pitterno was hired as its head coach in 1999 (in hopes of reaching the elusive number 1 ranking), atttendance at the five Saturday home games each year increased. Prior to Pitternos's arrival, attendance generally averaged 25,000 to 29,000 per game. Season ticket sales bumped up by 10,000 just with the announcement of the new coach's arrival. Stephenville and SWU were ready to move to the big time!
The immediate issue facing SWU, however, was not NCAA ranking. It was capacity. The existing SWU stadium, built in 1953, has seating for 54,000 fans. The following table indicates attendance at each game for the past 6 years.
One of Pitterno's demands upon joining SWU had been a stadium expansion, or possibly even a new stadium. With attendance increasing, SWU administrators began to face the issue head-on. Pitterno had wanted dormitories solely for his athletes in the stadium as an additional feature of any expansion.
SWU's president, Dr. Joel Wisner, decided it was time for his vice president of development to forecast when the existing stadium would "max out". The expansion was, in his mind, a given. But Wisner needed to know how long he could wait. He also sought a revenue projection, assuming an average ticket price of $20 in 2006 and a 5% increase each year in future prices.


2000
GameAttendeesOpponent
134,200Baylor
239,800Texas
338,200LSU
426,900Arkansas
535,100USC


2001
GameAttendeesOpponent
136,100Oklahoma
240,200Nebraska
339,100UCLA
425,300Nevada
536,200Ohio State


2002
GameAttendeesOpponent
135,900TCU
2 46,500Texas Tech
343,100Alaska
427,900Arizona
539,200Rice


2003
GameAttendeesOpponent
141,900Arkansas
246,100Missouri
343,900Florida
4 30,100Miami
540,500Duke


2004
GameAttendeesOpponent
142,500Indiana
248,200North Texas
344,200Texas A&M
433,900Southern
547,800Oklahoma


2005
GameAttendeesOpponent
146,900LSU
250,100Texas
345,900Prairie View A&M
436,300Montana
549,900Arizona State

Discussion Questions

  1. Develop a forecasting model, justifying its selection over other techniques, and project attendance through 2007.
  2. What revenues are to be expected in 2006 and 2007?
  3. Discuss the school's options.

Solution:

Case Studies

SOUTHWESTERN UNIVERSITY: B

This is the second of a series of integrated case studies that run throughout the text.

1. One way to address the case is with separate forecasting models for each game. Clearly, the homecoming game (week 2) and the fourth game (craft festival) are unique attendance situations.




Forecasts


Game

Model


2006

2007

R2

 1

y = 30,713 + 2,534x


 48,453

 50,988

0.92

 2

y = 37,640 + 2,146x


 52,660

 54,806

0.90

 3

y = 36,940 + 1,560x


 47,860

 49,420

0.91

 4

y = 22,567 + 2,143x


 37,567

 39,710

0.88

 5

y = 30,440 + 3,146x


 52,460

 55,606

0.93

Total




239,000



250,530













(where y = attendance and x = time)

2. Revenue in 2006 = (239,000) ($20/ticket) = $4,780,000

Revenue in 2007 = (250,530) ($21/ticket) = $5,261,130

3. In games 2 and 5, the forecast for 2007 exceeds stadium capacity. With this appearing to be a continuing trend, the time has come for a new or expanded stadium.

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