Business Data Analysis - BSS002-6

Assessment 1: Individual Report - It is expected that each student work independently on all the tasks set out in this assignment, applying problem solving strategies and selecting appropriate techniques in modelling and simulation in order to produce an individual report according to the guidelines provided. This individual work must be your own work only with no consultation with others. The individual report must not exceed 2,000 words. Submit your completed report only via the turnitin link which will be available a week before the assignment submission deadline in the "Assessment & Feedback" folder.

Please note that you should have a genuine individual effort at solving the given tasks; however, to help those who had made every effort in completing their work some guidance will be given in the class.

Individual feedback will be provided within 15 working days and is based on: How well did your work meet the stated assessment criteria? and How could you improve your future performance in this type of task?.

Develop a basic mathematical model of a business scenario.

Southwest Airlines

More than 38 years ago, Rollin King and Herb Kelleher got together and decided to start a different kind of airline. They began with one simple notion: If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline. And you know what? They were right. Southwest Airlines operates a commuter flight between Orlando City in the central region of the U.S. state of Floridaand Long island which is an island in the U.S. state of New York. The plane holds 30 passengers, and the airline makes ∈100 profit on each passenger on the flight. When South Central takes 30 reservations for the flight, experience has shown that on average, two passengers do not show up. As a result, with 30 reservations, Southwest is averaging 28 passengers with a profit of 28(100) = ∈2,800 per flight. The airline operations office has asked for an evaluation of an overbooking strategy where they would accept 32 reservations even though the airplane holds only 30 passengers. The probability distribution for the number of passengers showing up when 32 reservations are accepted is as follows:

The airline will receive a profit of ∈100 for each passenger on the flight up to the capacity of 30 passengers. The airline will incur a cost of any passenger denied seating on the flight. This cost covers added expenses of rescheduling the passenger as well as loss of goodwill, estimated to be ∈150 per passenger.

Task 1

(a) Develop a worksheet model that will simulate the performance of the overbooking system. Simulate the number of passengers showing up for each of 500. Use the results to compute the profit for each flight.

(b) Does your simulation recommend the overbooking strategy? What is the mean profit per flight if overbooking is implemented?

(c) Explain how your simulation model could be used to evaluate other overbooking levels such as 31, 33, 34 and for recommending overbooking strategy.

The management at Southwest Airlines is interested in using simulation to estimate the profit per unit for a new product they have developed called "EarlyBird Check-InSM". The Probability distributions for the purchase cost, the labour cost and the transportation cost for this product are given in the table below:

Assuming that these are the only costs and that the selling price for the product will be ∈45 per unit.

Task 2

(a) Provide the base-case, worst-case and best-case calculations for the profit per unit.

(b) Set up intervals of random numbers that can be used to randomly generate the three cost components. Using the random numbers 0.1862, 0.7466 and 0.6171, calculate the profit per unit.

(c) Management believes the project many not be profitable if the profit per unit is less than ∈5. Explain how simulation can be used to estimate the probability the profit per unit will be less than ∈5.

Task 3

The management at Southwest Airlines is interested in using simulation to estimate the profit per unit for a new product they have developed called "Android App". The Airlines advertising campaign for this new product is as follows:

"Whether you're planning your next trip or checking in for your flight, the Southwest Airlines Android App makes travelling even more convenient. From the App you can check flight status, change reservations, add EarlyBird Check-InSM to an existing reservation, access your Rapid Rewards account and more while you're on the go!"

The fixed cost to begin the production of the product is ∈30,000. The variable cost for the product is uniformly distributed between ∈16 and ∈24 per unit. The product will sell for ∈50 per unit. Demand for the product is best described by a normal probability distribution with a mean of 1200 units and a standard deviation of 300 units. Use 500 simulation trials to answer the following questions.

(a) What is the mean profit for the simulation?

(b) What is the probability the project will result in a loss?

(c) What is your recommendation concerning the introduction of the product?A simple guide for providing a clear structure to your group report

Front Cover

You need to have a front cover to tell the reader about the title of your assignment, your course, the unit, full details of group members and percentage contribution of each member

Executive Summary

This is a brief summary of your whole report and you should write it when you have finished the project, you may want to write it using these headings:
a) Background
b) Purpose/Objective
c) Methodology
d) Key Findings and Conclusions
e) Lessons Learned
f) Recommendations

This should about 200 words.

Table of Contents

This should be a list of main headings and sub-headings that you have used in your report such as:

1.0 Introduction
2.0 Methodology

Etc.

This should not be so detailed that the reader gets lost or so short that says very little.

This should provide a clear structure with correct paging on one page.

Introduction

In the introduction you are telling the reader

(a) What is going to be considered in the report?

(b) Why is the report written - the importance of the report to the reader

(c) How is the report organised

This should about one full page.

Methodology

This should be where you answer each question raised in the assignment as fully as you can with the aid of charts, diagrams, graphs, summary tables and all you calculation nicely put together and clearly presented and interpreted.

This should be about one page for each question in the assignment.

Conclusions

What are your key findings? How does your finding help managers to make a more informed decision? How does your finding may help in improving processes or products or services?

This should look back at the methodology and your findings and should about ¾ of a page.

Recommendations

From your findings and conclusions can you recommend 5 or 6 points that would really help to improve the Company?

References

This is where you put down any resources you have used to compile your report, such as: books, websites, etc.