UNIVERSITY OF BOHOL

PROFESSIONAL STUDIES

GROUP 2 CASE STUDY ANALYSES

1. Southwestern University Case Study
2. State Automobile License Renewals
May 15, 2013

Cases Analyses Submitted to

Engr. Liezl Gallardo, Ph D BM (cand)
as partial fulfillment of the requirements in
BA 203- Production Management
Summer, SY 2013

Beverly S. Baruis
Pretty Edulan
JP Patatag
MSBA
1. SOUTHWESTERN UNIVERSITY CASE STUDY:

Brief Description:

Southwestern University is known in its city as a football powerhouse. SWU is

usually in the top 20 in college football ranking. As we have known that the enrollees in this university
close to 20,000 students only. When Bo Pitterno was hired as its head coach in 2003, the attendance at
the five Saturday home games each year increased. The 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. The
existing stadium has seating capacity of 54,000 fans.

Discussion Questions:

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

Group 2 selected three (3) models to develop a forecasting model in this case: (a)
naïve approach, (b) moving average, and (c) trend projections with seasonality.

A) Naïve Approach is to assume that demand in the next year/period will be equal to demand in the
most recent period.

Naïve Approach

2009 2010 2011

Game Attendance Attendance Attendance

1 46,900 46,900 46,900

2a 50,100 50,100 50,100

3 45,900 45,900 45,900

4b 36,300 36,300 36,300

5 49,900 49,900 49,900

B) Moving Average forecast uses a number of historical actual data values to generate a forecast. It is
useful if we can assume that market demand will stay fairly steady over time.

Moving Average

Games 2004 2005 2006 2007 2008 2009 2010 2011

1 34,200 36,100 35,900 41,900 42,500 46,900 39,583 40,480

2a 39,800 40,200 46,500 46,100 48,200 50,100 45,150 46,041

3 38,200 39,100 43,100 43,900 44,200 45,900 42,400 43,100

4b 26,900 25,300 27,900 30,100 33,900 36,300 30,067 30,594

5 35,100 36,200 39,200 40,500 47,800 49,900 41,450 42,508

C)Trend projections. According to the meaning of the trend projections that this technique fits a trend
line to a series of historical data points and then projects the line into the future for medium to long-
range forecasts.

Table C.1

Trend Projections 2010

Demand
Year Time period per year x² xy

2004 1 174,200 1 174,200

2005 2 176,900 4 353,800

2006 3 192,600 9 577,800

2007 4 202,500 16 810,000

2008 5 216,600 25 1,083,000

2009 6 229,100 36 1,374,600

21 1,191,900 91 4,373,400

xˉ = 21/6 = 3.5 y= 1,191,900/6 = 198,650

b = 4,373,400 – (6) (3.5) (198,650) = 201,750 = 11,528

91 – (6) (3.5²) 17.50

a = 198,650 – 1,1528 (3.5) = 158,302

Demand in 2010 = 158,302 + 1,1528 (7)

= 238,998 attendees

The forecasted demand attendees in 2010 are 238,998.

Table C.2

Trend Projections 2011

Year Time period Demand x² xy

2004 1 174,200 1 174,200

2005 2 176,900 4 353,800

2006 3 192,600 9 577,800

2007 4 202,500 16 810,000

2008 5 216,600 25 1,083,000

2009 6 229,100 36 1,374,600

2010 7 238,998 49 1,672,986

28 1,430,898 140 6,046,386

xˉ = 28/7 = 4 y = 1,430,898/7 =204,414

b = 6,046,386 – (7) (4) (204,414) = 322,822 = 11,529

140 – (7) (4²) 28

a = 204,414 – 11,529 (4) = 158,298

Demand in 2011 = 158,298 + 11,529 (8)

= 250,530 attendees

The forecasted demand attendees in 2011 are 250,530.

 Now the group wants to develop at the five Saturday home games indices for
attendance from 2010 to 2011.

Seasonal variations that in data are regular up-and-down movements in a time series
that relate to recurring events such as weather or holidays. Seasonality may be applied to hourly, daily,
weekly, monthly, or other recurring patterns. Similarly, understanding seasonal variations is important
for capacity planning in organizations that handle peak loads. The presence of seasonality makes
adjustments in trend-line forecasts necessary.

Table C.3

Seasonal Variations

Project Attendance 2010

Average Average Seasonal

Games 2004 2005 2006 2007 2008 2009 Demand per game Index

1 34,200 36,100 35,900 41,900 42,500 46,900 39,583 39,730 0.9963

2a 39,800 40,200 46,500 46,100 48,200 50,100 45,150 39,730 1.1364208

3 38,200 39,100 43,100 43,900 44,200 45,900 42,400 39,730 1.0672036

4b 26,900 25,300 27,900 30,100 33,900 36,300 30,066 39,730 0.756745

5 35,100 36,200 39,200 40,500 47,800 49,900 41,450 39,730 1.0432922

198,649

Average per game demand = 198,649/5 = 39,730

As per forecasted demand attendees in 2010 are 238,998.

We will be using the seasonal indices above to forecast at the five Saturday home
games in 2010.

Game Attendance Demand per game

1 238,998/5 x .9963 = 47,622
2a 238,998/5 x 1.1364208 = 54,320
3 238,998/5 x 1.0672036 = 51,011
4b 238,998/5 x .7567581 = 36,173
5 238,998/5 x 1.0432922 = 49,868
Table C.4

Project Attendance 2011

Average
Average per Seasonal
Games 2004 2005 2006 2007 2008 2009 2010 Demand game Index

1 34,200 36,100 35,900 41,900 42,500 46,900 47,623 40,731 40,882 0.9963064

2a 39,800 40,200 46,500 46,100 48,200 50,100 54,321 46,460 40,882 1.1364415

3 38,200 39,100 43,100 43,900 44,200 45,900 51,012 43,630 40,882 1.0672178

4b 26,900 25,300 27,900 30,100 33,900 36,300 36,173 30,939 40,882 0.7567878

5 35,100 36,200 39,200 40,500 47,800 49,900 49,869 42,652 40,882 1.0432953

204,412

Average per game = 204,412/5 = 40,882

As per forecasted demand in 2011 are 250,530

We will be using those seasonal indices above to forecast the attendance at the
five Saturday home games in 2011.

Game Attendance Demand per game

1 250,530/5 x .9963064 = 49,920
2a 250,530/5 x 1.1364415 = 56,942
3 250,530/5 x 1.0672178 = 53,474
4b 250,530/5 x .7567878 = 37,919
5 250.530/5 x 1.0432953 = 52,275
Table C.5

Projected attendees per game from 2010 to 2011

Games 2004 2005 2006 2007 2008 2009 2010 2011

1 34,200 36,100 35,900 41,900 42,500 46,900 47,623 49,920

2a 39,800 40,200 46,500 46,100 48,200 50,100 54,321 56,942

3 38,200 39,100 43,100 43,900 44,200 45,900 51,012 53,474

4b 26,900 25,300 27,900 30,100 33,900 36,300 36,173 37,919

5 35,100 36,200 39,200 40,500 47,800 49,900 49,869 52,275

Based on the computation above only the trend projections showed that the
attendance from the past years games through 2011 has gone up. The naïve approach keeps the
projection the same as the previous year’s attendance. The moving average made the forecast far less
than the last years’ attendance.

On these factors Group 2 believes that the trend projection forecasting method
is the best fit for projecting in this case where attendance for Southwestern University will actually
increasing in 2010 and 2011. This method also gives leverage to the new coach to get him new stadium
that he requested.

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

An assumed average ticket price of $50 in 2010 and a 5% increase each year in
future prices.

Based upon the trend projection with seasonality forecasts, the revenue for both
2010 and 2011 were computed. By computing the sum of the attendees for all the five games each year
and multiply by the respective ticket price for that year we can forecast the revenue to be expected in
2010 and 2011.
Revenue:

Game 2010 2011

1 47,623 49,920

2a 54,321 56,942

3 51,012 53,474

4b 36,173 37,919

5 49,869 52,275

Total 238,998 250,530

Price $50.00 $52.50
Revenue $11,949,900.00 $13,152,825.00

The computation above shows the forecasted revenue in 2010 and 2011. The
revenue in 2010 is expected to $11,949,900.00 and $13,152,825.00 in 2011 respectively.

3. Discuss the school’s opinions.

The option that this group will be taking is to build a new stadium as the
forecasts show that the stadium will be sold out somewhere in 2010 game days. It will continue to rise
and this should definitely be dealt with now to ensure there is no loss in revenue due to sold out games.

As the population increasing and generation getting modernize it is more likely

to build a new stadium to replace the aging stadium and that fits to the new generation and can
accommodate with the forecasted attendance in 2010 and 2011 and for the future to come. Since
technology is progressing in this modern world it is reasonable to think that s stadium could be built in
less than a year.

2. STATE AUTOMOBILE LICENSE RENEWALS

The following table is the steps of the driver’s license-renewal operations

associated with times required:
Table 2.1

State Automobile License – Renewal Process Times

Step Average time to perform

(seconds)
1. Review renewal application for correctness. 15”
2. Process and record payments 30”
3. Check file for violations and restrictions 60”
4. Conduct eye test 40”
5. Photograph applicant 20”
6. Issue temporary license 30”

Questions:

1. What is the maximum number of applications per hour that can be handled by the present
configuration of the process?

Figure 2.1

Step 1 Step 2 Step 3 Step 4 Step 5 Step 6

15” 30” 60” 40” 20” 30”

Solution: The bottleneck in this system is in step 3 at 60-seconds per application, resulting in an hourly
system capacity of 1 hour x 60 minutes x 60 seconds/ 60-seonds per application = 60 applications/ hour.

Answer: The maximum numbers of applications per hour that can be handled by the present
configuration of the process are 60 applications/hour.

2. How many applications can be processed per hour if a second clerk is added to check for violation
(step 3)?

Figure 2.2

Step 1 Step 2 Step 3 Step 4 Step 5 Step 6

1 Clerk 1 Clerk 2 Clerks 1 Clerk 1 Clerk 1 Clerk

15” 30” 60” 40” 20” 30”

30”
Solution: In this case, second clerk added to step 3. The 60-seconds checking time of file for violations
and restrictions in step 3 represents the process time each station. Next, the process time of the
combined or additional clerk in step 3 is 60-seconds per two applications, or 30 seconds per application.
Therefore, step 4 becomes the bottleneck for the entire license-renewal process and the system process
time is 40-seconds. The capacity per hour equals 3,600-seconds per hour/40-seconds per application =
90 applications per hour.

Answer: The maximum number of application per hour if the second clerk is added to check for
violations and restrictions are 90 applications per hour.

3. If the second clerk could be added anywhere you choose (and not necessarily to check for violations,
as in question 2), what is the maximum number of applications the process can handle? What is the new
configuration?

Figure 2.3

Step 1 Step 2 Step 3 Step 4 Step 5 Step 6

1 Clerk 2 Clerks 1 Clerk 1 Clerk 1 Clerk 1 Clerk

15’’ 30’’ 60’’ 40’’ 20’’ 30’’

15’’

Solution: If the second clerk will be added in step 2, process and record payments. The 30-seconds
processing and recording time of payments in step 2 represents the process time each station. Since we
added the second clerk in step 2 the process time with an additional clerk is 30-seconds per two
applications, or 15-seconds per application. Therefore, step 3 becomes the bottleneck for the entire
license-renewal process and the system process time is 60-seconds. So, the capacity per hour equals
3,600-seconds per hour/60-seconds per application = 60 applications/hour.

Answer: a. The maximum number of application per hour if the second clerk is added to step 2, process
and record payments are 60 applications per hour.

b. The table below is the new configuration.

Table 2.2

State Automobile License – Renewal Process Times

Step Processing Number Average time

time of clerks to perform
(seconds) (seconds)
1. Review renewal application for correctness. 15” 1 15’’
2. Process and record payments 30” 2 15’’
3. Check file for violations and restrictions 60” 1 60’’
4. Conduct eye test 40” 1 40’’
 5. Photograph applicant 20” 1 20’’
6. Issue temporary license 30’’ 1 30’’

4. How would you suggest modifying the process to accommodate 120 applications per hour? What is
the cost per application of this new configuration?

Considering a review of the jobs indicated that step 1, reviewing applications for
correctness, had to be performed before any other step could be taken. Similarly, step 6, issuing
temporary licenses, could not be performed until all the other steps were completed.

Table 2.3

State Automobile License – Renewal Process Times

Step Average time to perform

(seconds)
1. Review renewal application for correctness. 15”
2. Process and record payments 30”
3. Check file for violations and restrictions 60”
4. Conduct eye test 40”
5. Photograph applicant 20”
6. Issue temporary license 30”

Solution: We need to determine line balancing to minimize the imbalance between clerks while
meeting the required output/demand.

Cycle time (in seconds) = (1 hour x 60 minutes x 60 seconds)/ 120 applications

= 3,600/120 applications

= 30 seconds/application

Therefore, the bottleneck process time system requirement is 30-seconds.

The license-renewal process time in Table 2.3 shows that 6 operations are
necessary for a total operation time of 195 seconds.

Workers required = 195/30-seconds

= 6.5 or 7 workers

Based on the computation above that there are 30-seconds process time system
requirement and there is a total of 7 workers in this license-renewal process time. So, we need to
combined some activities and add workers on it.
 The Table 2.4 below will be the suggested modifying process to accommodate
120 applications per hour.

Table 2.4

The Activities Processing time Number Average time to

new (seconds) of clerks perform (seconds)
step
1 Review renewal application for 85 3 28.33
correctness, Process and record
payments, and Conduct eye test.
2 Check file for violations and restrictions 60 2 30
3 Photograph applicant 20 1 20
4 Issue temporary license 30 1 30

As per average time to perform on Table 2.4 the bottleneck time is 30-seconds. We combined/added
the three (3) clerks on step 1, review renewal application for correctness, process and record payments,
and conduct eye test, and 2 clerks on step 2, check file for violations and restrictions. On this the
capacity per hour equals 3,600 seconds per hour/ 30-seconds per application = 120 applications/ hour.

Table 2.5

The Activities Number of Cost per Total cost

new clerks hour per hour
step
1 Review renewal application for 3 12 36
correctness, Process and record
payments, and Conduct eye test.
2 Check file for violations and 2 12 24
restrictions
3 Photograph applicant 1 12 12
4 Issue temporary license 1 18 18
Total Labor cost per hour 90
Cost of camera 10
Total processing cost per hour 100

The cost per application = 100/120 =$0.83