Devry BSOP330 week 4 course project part 2

.png” alt=”Content frame” height=”15″ width=”83″>Case Study:
Southwestern University: F
The recent success of
Southwestern University’s football program is causing SWU’s president, Joel
Wisner, more problems than he faced during the team’s losing era in the early
1990s. For one thing, increasing game-day attendance is squeezing the town of
Stephenville, Texas and the campus. Complaints are arising over parking,
seating, concession prices, and even a shortage of programs at some games. Dr. Wisner, once again, turns to his stadium
manager, Hank Maddux. This time, he needs a guaranteed revenue stream to help
fuel the stadium expansion. One source of income could easily be the
high-profit game programs.

Selling for $6 each, programs are a tricky business. Under substantial pressure
from Wisner, Maddux knows he has to ensure that costs are held to a minimum and
contribution to the new expansion maximized. As a result, Maddux wants the
programs for each game to be purchased economically. His inquiries have yielded
two options. A local Stephenville printer, Sam Taylor of Quality Printing, has
offered the following discount schedule for the programs and game inserts:

Programs

Weekly Game Detail Inserts

10,000 to 30,000

$2.00 each

10,000 to 30,000

$1.00

30,000 to 60,000

$1.90 each

30,000 to 60,000

$0.95

60,000 to 250,000

$1.80 each

60,000 to 250,000

$0.90

250,000 and up

$1.50 each

250,000 and up

$0.85

As a second option,
however, First Printing, owned by Michael Shader, an S.W.U. alumnus in Ft.
Worth, will do the job for 10% less as a favor to help the athletic department.
This option will mean sending a truck to Ft. Worth to pick up each order.
Maddux estimates that the cost of each trip to Ft. Worth will be $250.

Maddux’s other major problem is he is never sure what the demand for programs
will be. Sales vary from opponent to opponent and how well the team is doing
that year. However, he doesknow that running out is a very bad idea.
This football team is not only expected to make money for SWU, but it is also
entertainment. This means programs for all who want them. With the new
facility, attendance could be 60,000 for each of the five home games. And two
of every three people buy a program.
In addition to the
programs, Maddux must purchase the inserts for each game. The inserts have
information about the opposing team, photos of the expected starters, and
recent game statistics. The purchasing issue is the same for inserts, except
inserts will be purchased separately for each game and are a total loss after
the game. The carrying cost, because inserts are to be delivered just as they
are needed, should be nominal; he estimates 5%. The other costs and the same
discount schedule apply, but the inserts only cost half as much because they
are much smaller. First Printing will give the same 10% discount on the
inserts.

Givens:
Annual demand is
300,000 (60,000 per game times 5 games)
Set-up cost for
programs is $1,000.00
Holding cost is 40%

DISCUSSION QUESTIONS
1.With whom should
Maddux place the order for the programs, and how many should he order each
time?

2.With whom should Maddux place the order for the inserts, and how
many should he order each time?
3.What is Maddux’s total cost for programs with inserts for the
season?

4.What other program management opportunities might Maddux pursue?[Return to the Top of this Page]
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