DECISION

MODELLING
PROJECT

Selecting the
Best
2018 Canteen
Partner

JANUARY 3
Authored by: Group 01
Priyanshu Jain – MBA19218
Kunal Kashyap – MBA19198
Mayank Singhal – MBA19202
Shubham Khokhar – MBA19230
Dev Anand – MBA19187
Anupam Dwivedi – MBA19177
Parul Gupta – MBA19264

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AIM & OBJECTIVE

The primary objective of the project is to provide a solution for the optimal selection of canteen
service provider.
• To create a decision tree to weigh-in the prospects of contracts for academic block canteen.
• To understand the real implementations and working of Decision Tree modelling in
Managerial decision making.
• To estimate the revenue increment for the administration in case of various decisions and at
multiple stages.

SCOPE

In this project, we used Decision Tree Modelling to analyse various alternatives while selecting the
best fit for IIM Kashipur.

• Demand and Supply can be studied.

• Detailed pricing schemes can be added in the model.
• Other business models can be explored and incorporated in the decision tree branches.

MODELLING TECHNIQUE
The model used for this project is Decision Tree Modelling.

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CURRENT SCENARIO
The contract of Hotel - The Heaven with IIM Kashipur is going to expire by the end of this year. From
January 2020, IIM is mulling to test various options of extending this contractor will be inviting
tenders from new restaurants/hotels.
Currently, IIM Kashipur has two options to choose from:
1. To continue with The Haven
2. To look for new vendors

Continuing with The Haven

If administrations decide to continue with The Haven, it would also look whether to go for rent hike
or not. There is a 71% chance that The Haven is going to increase the prices of various dishes on its
menu, irrespectively of whether there will be a rent hike or not.

Furthermore, there is a considerable possibility that The Haven would look forward to changing the
menu in future. There is 82% probability that it would change the food menu given there is an
increase in the prices. The likelihood that there will be a change in the food menu given the prices
remain the same is 85%.

Potential Payoffs of various decisions:

No change in menu given an increase in price and a rent hike 3% decrease in profits
Change in menu given an increase in price and a rent hike 13% increase in profits
No change in menu given prices remain same and a rent hike 10% decrease in profits
Change in menu given prices remain same and a rent hike 20% increase in profits
No change in menu given an increase in price and no rent hike 1% decrease in profits
Change in menu given an increase in price and no rent hike 11% increase in profits
No change in menu given prices remain same and no rent hike 9% decrease in profits
Change in menu given prices remain same and no rent hike 18% increase in profits

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Looking for a new vendor

The administrations are also thinking to have new vendors instead of continuing with The Haven. The
two possible alternatives are
1. Going with hotels like Bliss and Manor (they would also provide staying and accommodation
services to the guests visiting IIM Kashipur)
2. Going with standardised food outlets like Dominos, CCD and Rollacosta.

The probabilities of various standardised food outlets agreeing to expand their network in IIM
Kashipur are as follows:

Dominos 25%
CCD 35%
Rollacosta 40%

Potential Payoffs with various vendors:

Bliss 17% increase in profits

Manor 17% increase in profits
Dominos 20% increase in profits
CCD 21% increase in profits
Rollacosta 23% increase in profits

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DECISION TREE
The data in following decision tree is based on survey results conducted by us in which we asked
various questions to get the preferences of students of IIM Kashipur and based on that we have
calculated our results. The values for-profits have been assumed and the variable x has been assumed
the initial profit or the current profit administration has from The Haven. All the following values are
calculated as a deviation from the original value. In the end, we will see whether the decisions will be
profitable or not and which decision will maximize our profit.

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SOLUTION AND INTERPRETATION
From the decision tree, we get the following expected payoffs

When we continue with Haven, then the best option to choose is continuing by increasing the rent
hike as we get 13.3% profit from this option.
If we go with the option of getting a New Vendor, then we should continue with standardised food
outlets as we will get 21.6% profit out of it.

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From both the options getting a new vendor is the best option as we are getting 21.6% profit which is
higher than that of continuing with haven.

CONCLUSION:
The Decision Tree method employed to find the prospective café or canteen partner for the IIM
Kashipur academic building has thrown light on the pros and cons of various options. The analysis
suggests that we should give the tender to Rollacosta. It would be win-win for the institute and the
Rollacosta. This finding is in sync with the survey outcome.

SCOPE FOR FURTHER STUDY

• Demand and Supply can be studied.
• Detailed pricing schemes can be added in the model.
• Other business models can be explored and incorporated in the decision tree branches.