Case study 1 Southwestern University

(Topic : Forecasting)

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 Phil Flamm was hired as its head coach in 2009 (in hopes of reaching
the elusive number 1 ranking), attendance at the five Saturday home games each year
increased. Prior to Flamm’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 Flam’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. Flam 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 $50 in 2016 and a 5% increase each year in future prices.

Discussion Questions
a) Develop a forecasting model, justifying its selection over other techniques 2017
FORECASTING MODEL TECHNIQUES:
In this case we will use the trend projection method ( least square method ).
Step 1) identify the use of forecasting
Step 2) identify the items that should be used in Forecasting
Step 3) identify the time horizon
Step 4) identify which technique will used As we said before we will used the time horizon approach
especially the least square method
Step 5) gathering the data the forecasting:-The attendance for each game gathering the data about the
forecast.
Step6) make the forecast:-
As the least square method equation as follow:
Y= a+bx
Where :-
Y hat = computed value that will be predicted
A= y axis intercept
B= slope of the regression line
X =the independent variable
We will calculate the B variable by the following equation:
We will calculate the A variable by the following equation :-
a) Compute the forecasting figure for 2017
1st game:
YEARS X Attendance(Y) X
2
XY
2010 1 34200 1 34200
2011 2 36100 4 72200
2012 3 35900 9 107700
2013 4 41900 16 167600
2014 5 42500 25 212500
2015 6 46900 36 281400

∑ x =21 ∑ y=237500 ∑ x 2=91 ∑ xy =875600

x =3.5 y =39583.33

∑ xy − n x y 875600−(6)( 3.5)(39583.33)
b= ∑ x 2 −n x 2 = 91−(6)(3.5)(3.5) =2534.28
a= y -b x = 39583.33-2534.28*3.5=30713.35
1st game attendance for year 2017
Y= 30713.35+2534.28(17)
Y= 565209.71
2nd game:
YEARS X Attendance(Y) X2 XY
2010 1 39,800 1 39800
2011 2 40,200 4 80400
2012 3 46,500 9 139500
2013 4 46,100 16 184400
2014 5 48,200 25 241000
2015 6 50,100 36 300600

∑ x =21 ∑ y=270900 ∑ x 2=91 ∑ xy =985700

x =3.5 y =45150

∑ xy − n x y 985700 −(6)( 3.5)(45150)

b= ∑ x −n x =
2 2
91 −(6)(3.5)(3.5) =2145.71
a= y -b x = 45150-2145.71*3.5=37640
2nd game attendance for year 2017
Y= 37640+2145.71(17)
Y=676357.07
3rdgame :

YEARS X Attendance(Y) X2 XY
2010 1 38200 1 38200
2011 2 39100 4 78200
2012 3 43100 9 129300
2013 4 43900 16 175600
2014 5 44200 25 221000
2015 6 45900 36 275400

∑ x =21 ∑ y=254400 ∑ x 2=91 ∑ xy =917700

x =3.5 y =42400

∑ xy − n x y 917700 −(6)( 3.5)(42400)

b= ∑ x −n x =
2 2
91 −(6)(3.5)(3.5) =1560
a= y -b x = 42400-1560*3.5=36940
3rd game attendance for year 2017
Y= 36940+1560(17)
Y= 654500
4th game:

YEARS X Attendance(Y) X
2
XY
2010 1 26400 1 26400
2011 2 25300 4 50600
2012 3 27900 9 83700
2013 4 30100 16 120400
2014 5 33900 25 169500
2015 6 36300 36 217800

∑ x =21 ∑ y=179900 ∑ x 2=91 ∑ xy =668400

x =3.5 y =29983.33

∑ xy − n x y 668400−(6)(3.5)(29983.33)
b= ∑ x −n x =
2 2
91−(6)(3.5)(3.5) =2214.28
a= y -b x = 29983.33-2214.28*3.5=22233.35
4th game attendance for year 2017
Y= 2233.35+2214.28(17)
Y= 75609.71
5th game:

YEARS X Attendance(Y) X
2
XY
2010 1 35100 1 35100
2011 2 36200 4 72400
2012 3 39200 9 117600
2013 4 40500 16 162000
2014 5 47800 25 239000
2015 6 49900 36 299400

∑ x =21 ∑ y=248700 ∑ x 2=91 ∑ xy =925500

x =3.5 y =41450

∑ xy − n x y 925500 −(6)( 3.5)(41450)

b= ∑ x −n x =
2 2
91 −(6)(3.5)(3.5) =3145.75
a= y -b x = 41450-3145.71*3.5=30440
5th game attendance for year 2017
Y= 30440+3145.75(17)
Y= 570957.75
Attendance for 2017
1st game 2nd game 3rd game 4th game 5th game

565209.71 676357.07 654500 75609.71 570957.75

Attendance for 2016

1st game 2nd game 3rd game 4th game 5th game

531962.08 636571.36 616000 71162.08 537372

b)
Revenue for 2016 and ticket price =50$
Total revenue in year 2016 =2393067.52
Total revenue =2393067.52x50
=119653376$
Revenue for 2017 and ticket price= 52.5$
Total revenue in year2017 = 2542634.24
Total revenue = 2542634.24x52.5
=133488297.6$
C)
Southwestern University has a number of strong options for constructing a new stadium and
meeting Coach Flamm’s demands, but time constraints will start to limit some of them if they
don’t act fast. In order to understand the schools options, one must first understand what the
future game attendances are foretasted to look like. They must also understand what the schools
projected revenues from ticket sales will be over the next two years. Based on those attendance
forecasts and revenue projections it’s clear that SWU is in a strong financial position, and that it
should therefore have a new stadium built by the second game of 2017, to prevent having to turn
away fans. Attendance records show a general growing trend since Coach Flamm’s took the
helm in 2009. The following charts were created using Microsoft Excel and the “Least-Squares
method” to forecast how this trend would impact attendance in each of the games in 2016 and
2017.