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) nave approach, (b) moving average, and (c) trend projections with seasonality. A) Nave Approach is to assume that demand in the next year/period will be equal to demand in the most recent period. Nave Approach 2009 2010 2011 Attendance Attendance Attendance 46,900 50,100 45,900 36,300 49,900 46,900 50,100 45,900 36,300 49,900 46,900 50,100 45,900 36,300 49,900

Game 1 2a 3 4b 5

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 1 2a 3 4b 5 2004 34,200 39,800 38,200 26,900 35,100 2005 36,100 40,200 39,100 25,300 36,200 2006 2007 2008 2009 2010 2011

35,900 41,900 42,500 46,500 46,100 48,200 43,100 43,900 44,200 27,900 30,100 33,900 39,200 40,500 47,800

46,900 39,583 40,480 50,100 45,150 46,041 45,900 42,400 43,100 36,300 30,067 30,594 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 longrange forecasts. Table C.1 Trend Projections 2010

Year 2004 2005 2006 2007 2008 2009

Time period 1 2 3 4 5 6 21

Demand per year 174,200 176,900 192,600 202,500 216,600 229,100 1,191,900

x 1 4 9 16 25 36 91

xy 174,200 353,800 577,800 810,000 1,083,000 1,374,600 4,373,400

x = 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) (3.5) 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 2004 2005 2006 2007 2008 2009 2010 Time period 1 2 3 4 5 6 7 28 Demand 174,200 176,900 192,600 202,500 216,600 229,100 238,998 1,430,898 x 1 4 9 16 25 36 49 140 xy 174,200 353,800 577,800 810,000 1,083,000 1,374,600 1,672,986 6,046,386 17.50

x = 28/7 = 4

y = 1,430,898/7 =204,414

b = 6,046,386 (7) (4) (204,414) = 322,822 = 11,529 140 (7) (4) 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. 28

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 Demand 39,583 45,150 42,400 30,066 41,450 198,649 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 1 2a 3 4b 5 Attendance Demand per game 238,998/5 x .9963 = 47,622 238,998/5 x 1.1364208 = 54,320 238,998/5 x 1.0672036 = 51,011 238,998/5 x .7567581 = 36,173 238,998/5 x 1.0432922 = 49,868 Average per game 39,730 39,730 39,730 39,730 39,730 Seasonal Index 0.9963 1.1364208 1.0672036 0.756745 1.0432922

Games 1 2a 3 4b 5

2004 34,200 39,800 38,200 26,900 35,100

2005 36,100 40,200 39,100 25,300 36,200

2006 35,900 46,500 43,100 27,900 39,200

2007 41,900 46,100 43,900 30,100 40,500

2008 42,500 48,200 44,200 33,900 47,800

2009 46,900 50,100 45,900 36,300 49,900

Table C.4 Project Attendance 2011 Average per game 40,882 40,882 40,882 40,882 40,882

Games 1 2a 3 4b 5

2004 34,200 39,800 38,200 26,900 35,100

2005

2006

2007

2008

2009

2010 47,623 54,321 51,012 36,173 49,869

Average Demand 40,731 46,460 43,630 30,939 42,652 204,412

Seasonal Index 0.9963064 1.1364415 1.0672178 0.7567878 1.0432953

36,100 35,900 41,900 42,500 46,900 40,200 46,500 46,100 48,200 50,100 39,100 43,100 43,900 44,200 45,900 25,300 27,900 30,100 33,900 36,300 36,200 39,200 40,500 47,800 49,900

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

Table C.5 Projected attendees per game from 2010 to 2011 Games 1 2a 3 4b 5 2004 34,200 39,800 38,200 26,900 35,100 2005 36,100 40,200 39,100 25,300 36,200 2006 35,900 46,500 43,100 27,900 39,200 2007 41,900 46,100 43,900 30,100 40,500 2008 42,500 48,200 44,200 33,900 47,800 2009 46,900 50,100 45,900 36,300 49,900 2010 47,623 54,321 51,012 36,173 49,869 2011 49,920 56,942 53,474 37,919 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 nave approach keeps the projection the same as the previous years 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 1 2a 3 4b 5 2010 47,623 54,321 51,012 36,173 49,869 2011 49,920 56,942 53,474 37,919 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 schools 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 drivers license-renewal operations associated with times required:

Table 2.1 State Automobile License Renewal Process Times Step 1. Review renewal application for correctness. 2. Process and record payments 3. Check file for violations and restrictions 4. Conduct eye test 5. Photograph applicant 6. Issue temporary license Average time to perform (seconds) 15 30 60 40 20 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 15

Step 2 30

Step 3 60

Step 4 40

Step 5 20

Step 6 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 1 Clerk 15

Step 2 1 Clerk 30

Step 3 2 Clerks 60 30

Step 4 1 Clerk 40

Step 5 1 Clerk 20

Step 6 1 Clerk 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 1 Clerk 15 Step 2 2 Clerks 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 time (seconds) 15 30 60 40 Number of clerks 1 2 1 1 Average time to perform (seconds) 15 15 60 40 Step 3 1 Clerk 60 Step 4 1 Clerk 40 Step 5 1 Clerk 20 Step 6 1 Clerk 30

1. Review renewal application for correctness. 2. Process and record payments 3. Check file for violations and restrictions 4. Conduct eye test

5. Photograph applicant 6. Issue temporary license

20 30

1 1

20 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 1. Review renewal application for correctness. 2. Process and record payments 3. Check file for violations and restrictions 4. Conduct eye test 5. Photograph applicant 6. Issue temporary license Average time to perform (seconds) 15 30 60 40 20 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 new step 1 Activities Processing time (seconds) 85 Number of clerks 3 Average time to perform (seconds) 28.33

2 3 4

Review renewal application for correctness, Process and record payments, and Conduct eye test. Check file for violations and restrictions Photograph applicant Issue temporary license

60 20 30

2 1 1

30 20 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 new step 1 Activities Number of clerks 3 Cost per hour 12 Total cost per hour 36

2 3 4

Review renewal application for correctness, Process and record payments, and Conduct eye test. Check file for violations and restrictions Photograph applicant Issue temporary license Total Labor cost per hour Cost of camera Total processing cost per hour

2 1 1

12 12 18

24 12 18 90 10 100

The cost per application = 100/120 =$0.83