As Kathryn Regan, director of marketing, gazed out the window of her Greensboro, North Carolina, office, her attention immediately shifted from the picture-perfect day before her to wondering what the weather was like in Peletier, North Carolina. Of course, today's weather in Peletier was largely irrelevant. What really mattered was what the weather would be like a week from this coming Saturday, the date of the Crystal Coast Music Festival. As director of marketing for CRC Management Company, a franchisee of Fuddruckers, Kathryn was responsible for coordinating all aspects of being the sole food vendor for the music festival. As such, she needed to finalize the menu, determine the food prices, and determine the quantities of food to or-der. Complicating her decision were a number of uncertainties, including the weather and its impact on attendance, and how much food each attendee would consume. Kathryn commented: "One of my chief concerns is having enough product to meet customer demand. In the restaurant business, one bad experience can easily cancel out 10 good ones." Steve Regan, president, summarized his feelings regarding his company's participation in the event: "I am comfortable doing the event because there is essentially little upfront cost to us, but there is potential to make a reasonable profit and get some free advertising along the way. If this works out well for us, we might consider investing in a trailer and participating in more outdoor events in the future." Kathryn added, "Although the concert and advertising may also help us increase sales in our Jacksonville locations, my gut tells me we can clear a profit of over $25,000 if we plan this event right!" The Crystal Coast Music Festival The Crystal Coast Music Festival was to be held on June 2, at the Carteret County Speedway in Peletier, North Carolina. The event included some of the region's best beach music bands as well as top 40 and country music groups. This year's line-up included Diamond Rio, Marshall Tucker, Tim Rushlow, Clarence Carter, and Land of Oz. The festival was scheduled to run from noon until 7:00 P.M. Ten thousand tickets were printed for the festival; tickets cost $25 if purchased in advance and $35 at the gate. The promoter of the event had a media budget of $125,000, which was spent on both print and radio advertisements. Although CRC Management Co., the owner of the local Fuddruckers, did not contribute to the media budget, the Fuddruckers name was mentioned in all advertisements. Kathryn noted that "the advertisements will promote Fuddruckers as having the best burger on the east coast." The majority of the radio advertisements appeared on five radio stations in eastern North Carolina including 93.3 (alternative), 98.7 (oldies), 95.1 (country), 92.0 (rock), and 105.1 (rock). Considering the likelihood of different weather conditions, Kathryn felt there was about a 70 percent chance that 4001 to 8,000 people would attend the event. Likewise, she felt that there was about a 20 percent chance that between 2,000 and 4.000 people would attend the event, and a 10 percent chance that 8001 to 10,000 people would attend. In all cases, Kathryn felt that any outcome within a given range was as likely as any other out-come. She explained: "In my conversations with the promoter, he stated that in past years attendance was never less than 4,000. Of course, 1asked to see his data, but he always seemed to evade my request. As I reflect on it now, I doubt he has any hard data to actually share with me. I also know that attendance will not exceed 10,000 because this is the total number of tickets printed for the event. Given the current weather forecast, I don't expect the event to be a sell-out. The better the weather, the more likely it is that people will show up. On the other hand, there are 100,000 marines just 7 miles away at Camp Lejeune who generally have some time to kill on Saturdays. This and the radio advertising that hit a diverse crowd is what I used to develop my attendance projections." Currently, the 1-week-ahead forecast predicted clear skies the day of the Crystal Coast Musical Festival. However, in monitoring the weather Kathryn noticed that frequently the forecast changed abruptly from one day to the next. She further estimated that if the weather on the day of the event turned out to be sunny the likelihood of 4001 to 8,000 people attending would decrease to 50 percent while the likelihood of 8001 to 10,000 people attending would increase to 30 percent. Similarly, if it rained on the day of the event, Kathryn estimated that there would be an 80 percent chance that 2,000 to 4,000 people would attend the event and a 20 percent chance that 4,001 to 8,000 people would attend. Kathryn further estimated that there was a 50 percent chance that the average event attendee would consume between 0.55 to 0.75 meals at the concert. Optimistically, she speculated that there was a 35 percent chance that attendees would con sure I to 2 meals; pessimistically, she felt there was a 15 per. cent chance that people attending the event would consume 01s to 0.30 meals. Kathryn explained: "Based on the time of the event, some people would eat once, some would eat twice, and some would probably just drink. Also, because it is an outside event, the weather would certainly affect the attendees' eating habits. When the weather is sunny with some clouds, people eat more; when it is hot and sunny with no clouds or rainy, they eat less." Food Service Planning Initially, Kathryn needed to determine exactly what items would be offered at the musical festival. Once this decision was made, the amount to charge for each menu item and the quantities to order could then be considered. Kathryn noted, "Because of the location of the concert, one complication with planning this event was having to deal with a supplier we have not dealt with previously. I worry that they won't have the food in stock." In terms of the menu offerings, Kathryn developed a limited menu option and a broad menu option. The limited menu option included -pound burgers, -pound hot dogs, and potato chips. The broad menu option included the same menu options as the limited menu plus chicken sandwiches. A complication associated with the broad menu option was that the chicken had to be ordered almost 1 week prior to the event when the weather outlook was much less certain; the hamburger meat, hot dogs. and potato chips could all be ordered three days prior to the event (Exhibit 1). Chicken Order Arrives Unwrap and Thaw Marinate Musical Festival Hamburger / Hot Dogs Order Arrives and Grind Buns Mix, Bake and Cut Produce Caps* Prepare Monday Tuesday Wednesday Thursday Friday Saturday *Produce caps consists of lettuce, tomato, pickle and onion. Exhibit 1: Planning Activities At another outdoor concert event CRC participated in, the breakdown in unit demand (not sales dollars) for hamburgers. hot dogs, and chicken was 20 percent, 75 percent, and 5 percent, respectively. This event was a pop rock concert held in Winston-Salem, North Carolina. However, according to Kathryn, it differed from the Crystal Coast Musical Festival in a number of significant ways. First, it was held consecutively over a Friday and Saturday night from 5 P.M. to 11 P.M. each night. Second, simultaneous performances were held on three stages spread out over several blocks. Finally, a younger audience was targeted. Regarding the Crystal Coast Musical Festival, Kathryn estimated that hamburgers would account for 50 percent of the demand, hot dogs for 30 percent, and chicken for 20 percent. She explained: "The marines that will be attending the Crystal Coast Musical Festival are more typical of our regular restate rant customers. Therefore, I adjusted the product mix based on our regular store sales. Also, the event held in Winston-Salem was more of a street festival where people stood and ate their food. I expect the people at the Crystal Coast Musical Festival will have lawn chairs and blankets to sit on when they eat their food." Kathryn summarized cost data and the anticipated price for these menu items (Exhibit 2). Because of the perishable nature of the food and the distance of the event from CRC's other restaurants, any unused food would need to be discarded or perhaps donated to local food shelters. Furthermore, given the special nature of the event, Kathryn did not anticipate significant shortage costs beyond the lost profits should they run out of one or more menu items. Another vendor was responsible for providing drink services. Menu Item Cost Anticipated Pricea -pound hamburger patty $1.01 $5.00 -pound hot dogs $0.55 $4.00 Chicken $1.10 $5.25 Hamburger, Hot Dog and Chicken Buns $0.20 Potato Chips $0.40 Produce (chicken and hamburgers) $0.45 Condiment packs $0.04 Plate $0.15 Sales tax for prepared food 1% aHamburgers, hot dogs, and chicken sandwiches all served with potato chips. Price includes sales tax. Exhibit 2: Cost and Pricing Data In staffing the musical festival event, CRC would incur a number of other expenses. First, it was anticipated that the booth would be staffed with four salaried members from headquarters and two hourly workers who earn $7 per hour. In addition, a tent would need to be rented for 3 days at a cost of $15, and a gas grill would need to be rented for 1 day at a cost of $15. Cooler space was to be provided by the event promoter. Finally, in consideration for being the event's sole food vendor, CRC was required to supply a VIP tent for the musicians with food at no cost. Based on the number of acts, Kathryn estimated that the musicians and their entourages would consume in the neighbourhood of 150 to 250 hamburgers, with all quantities in this range equally likely. The Decision It was Friday afternoon, May 26. Kathryn had just checked the Accuweather Web site (www.accuweather.com) for the fifth time today. The weather forecast was for clear the day of the event with thunderstorms the following two days. If Kathryn decided to go with the broad menu option, she would need to place the order for the chicken Monday morning. On Wednesday of next week, Kathryn had scheduled a meeting with the event promoter. The purpose of the meeting was to get a count on the number of tickets sold to date. Based on this information and a more current weather forecast, Kathryn would then need to quickly place the order for the hamburger meat, hot dogs, and potato chips late Wednesday afternoon. The most pressing issue was whether to go with the limited or broad menu. If the broad menu was selected, how much chicken should be ordered Monday morning? Once these decisions were made, Kathryn wanted to further analyse the situation regarding the quantities of hamburgers, hot dogs, and potato chips to order based on possible weather-attendanceconsumption patterns. She thought that by undertaking such an analysis now she could develop guidelines for placing the order on Wednesday afternoon. The one thing she did know for certain was that there would be little time for this analysis Wednesday afternoon once she received the updated ticket sales information and weather forecast

Based on Case Study 1, answer the following questions;

a) Does serving as the food vendor for the Crystal Coast Music Festival qualify as a project? Why or why not? Who are the stakeholders in this project?

b) What are the sources of uncertainty facing Kathryn Regan?

c) Can anything be done to help mitigate the uncertainty? Are there any unknown risks?

d) Would you recommend Kathryn go with the limited or broad menu? How much of each food item would you recommend Kathryn order? (Hint: you might consider simulating alternative scenarios and comparing the results of the simulation runs.)

e) Based on your projected order quantities, develop a budget for the project.