Operations Management (OMGT 1039) Assignment 1; Forecasting

1. Develop a forecasting model, justifying its selection over other techniques, and project
attendance through 2011.

The trend projections model seems to be the optimal fit for this historical data if it were to be
projected for the forthcoming seasons of 2010 and 2011. This model of forecasting
emphasizes the project timeline from a medium to long range guideline, which in this instance
is between 12 months to 3 years. Utilizing the least squares method associated with trend
projections enables linear least squares regression very efficient use of the data, particularly
when the data set is small like this from South-western University (SWU). Good results can
be obtained from a data set that optimistically envisions projections.

The projections for 2010 and 2011, suggested a total increase of ticket sales from 2009 to
2010 was 9905 tickets and from 2010 to 2011 totalled a difference in increase about 11530
ticket sales. As the figures suggest, the increased values from the trend projection model,
respectively possess a 4-5% in ticket sales, which in years to proceed would max out the
capacity of the current stadium for all home games.

Unlike the moving averages methods where the projections of the data set can erratically
misinterpret figures and decrease the value of the data set, offsetting a potential projection
increase. The nave method presents figures that impose the same values for corresponding
years however it is based on an annual basis.

2. What revenues are to be expected in 2010 and 2011?

With increasing ticket sales for home games every year thus far, the revenue generated per
ticket for 2010 amounted to a total amount of $11,950,250. In contrast to 2011, a 5% ticket
price increase, from $50 to $52.50, witnessed a revenue amount of $13,153,087.5, a
difference in profit, of around $1,202,837.5 for the periods between 2010 and 2011.
Revenues for 2011 with a 5% increase.
Ticket Sales 2010

Ticket Revenues ($50) Ticket Sales2011 Ticket Revenues ($52.50) 5%

Game
1
2
3
4
5
Total Sales
Total Revenues $

48456
52661
47860
37568
52461
239005

Total Profit from 2010 to 2011 $

2422775.0
2633050.0
2393000.0
1878375.0
2623050.0
11950250
1202837.5

50991
54807
49420
39710
55607
250535

2677016.3
2877367.5
2594550.0
2084786.3
2919367.5
13153087.5

3. Discuss South-Western University options?

From the trend projections imply that in 2010, two of their home games almost were at
capacity with attendance around 53,000. However, in 2011, those same two weeks of the
season superseded those amounts, up near the 55,000 capacity which is over capacity for the
current stadium layout.

It is more probable for the university to conduct a stadium expansion rather than build a new
stadium, given the time constraints before the 2011 season. The increase in ticket prices will
be suffice to conduct an upgrade over the stadium but needless to imply that increases in
ticket prices are imminent over the near future to support the overheads of the stadium from
the expansion and a possible new stadium. The revenues generated could also mean that the
coach is able to build dormitories for his athletes. Perhaps makeshift dorms in the expansion
to reduce cost and then look at including plan built dormitories in a possible new stadium.

Trend Projection for 2010

Time Period (x)
Game (n)
2004
2005
1
2
1
34200
36100
2
39800
40200
3
38200
39100
4
26900
25300
5
35100
36200
174200

176900

2006
3
35900
46500
43100
27900
39200

2007
4
41900
46100
43900
30100
40500

2008
5
42500
48200
44200
33900
47800

2009
6
46900
50100
45900
36300
49900

192600

202500

216600

229100

Demand (y) Time Period x

x^2

xy

y (avg/demand)

x (avg/time) b

Forecast

7
237500
270900
254400
180400
248700

21 1^2
21 2^2
21 3^2
21 4^2
21 5^2
6^2

1 875600
4 985700
9 917700
16 668900
25 925500
36
91 4373400

1191900
238380

39583
45150
42400
30067
41450

3.5
3.5
3.5
3.5
3.5

2535
2146
1560
2143
3146

30711
37639
36940
22567
30439

48455.5
52661.0
47860.0
37567.5
52461.0

Trend Projection for 2011

Time Period (x)
Game (n)
2004
2005
1
2
1
34200
36100
2
39800
40200
3
38200
39100
4
26900
25300
5
35100
36200

174200

176900

2006
3
35900
46500
43100
27900
39200

2007
4
41900
46100
43900
30100
40500

2008
5
42500
48200
44200
33900
47800

2009
6
46900
50100
45900
36300
49900

192600

202500

216600

229100

2010 Demand (y) Time Period x

7
48455.5
285956
28 1^2
52661
323561
28 2^2
47860
302260
28 3^2
37567.5
217968
28 4^2
52461
301161
28 5^2
6^2
7^2
239005
1430905
286181

x^2

xy
1
4
9
16
25
36
49
140

1214789
1354327
1252720
931873
1292727

6046435

y (avg/demand)
40851
46223
43180
31138
43023

x (avg/time) b
4.0
4.0
4.0
4.0
4.0

a
2535
2146
1560
2143
3146

Forecast
30711
37639
36940
22566
30439

50990.8
54807.0
49420.0
39710.2
55607.0

250535