CASE STUDIES Fast Creek Lightning: (B)* Fast Creek is a city in south central Saskatchewan located along the Trans-Canada Highway. Fast Creek has a population of just over 27 000 residents and is a regional hub for the many smaller towns and hundreds of farms in the surrounding area. Fast Creek is a trans- portation and industrial centre, and has several federal and provin- cial government offices. Fast Creek is also a sports centre, and its junior hockey team, the Fast Creek Lightning, has a long history of success in the Central Hockey League but has not won a major trophy in close to 10 years. Since the legendary Scotty Beauchamp was hired as head coach in 2011 (in the hopes of winning the elusive league and national championship), total attendance at home games for each month has increased. Prior to Beauchamp's arrival, attendance averaged 25 000 to 29 000 per month (or between 5000 and 5800 tickets for each of the five home games per month). Season ticket sales bumped up by almost 2000 just with the announcement of the new coach's arrival. The Fast Creek Lightning are ready to move to the big time! The immediate issue facing the Lightning, however, is not the championship. It is capacity. The existing Fast Creek arena, built in 1953, has seating for 10 800 fans. The following table indicates total home game attendance each month of the season for the past six years. One of Beauchamp's demands on joining the Lightning had been a new arena. With attendance increasing, Lightning executives and city officials have begun to face the issue head-on. Beauchamp would like a state-of-the-art training facility solely for his players as an additional feature of any expansion. The Lightning's owner, Keith MacLennan, has decided it is time for his vice-president of development to forecast when the existing arena will "max out". The expansion is, in his mind, a given. But MacLennan needs to know how long he could wait. He also seeks a revenue projection, assuming an average ticket price of $50 in 2017-2018 and a 5% increase each season in future prices. Discussion Questions 1. Develop a forecasting model, justifying its selection over other forecasting techniques, and project attendance through the 2018-2019 season. 2. What revenues are to be expected in the 2017-2018 and 2018-2019 seasons? 3. Discuss the team's options. Month 2013-2014 35.900 2011-2012 2012-2013 November 34 200 36 100 December 39 800 40 200 46 500 January 38 200 39 100 43 100 Februaryb 26 900 25 300 March 35 100 36 200 39 200 27.900 2016-2017 2014-2015 2015-2016 41.900 42.500 46 900 46 100 48 200 50 100 43.900 44 200 45 900 30 100 33.900 36 300 40 500 47 800 49 900 Month November December January Februaryb March "Every December, Fast Creek hosts a Holiday Classic weekend with special promo- tions and an old-timers' game that draws large crowds "A popular week-long winter carnival in nearby Helmsville every February has a negative impact on attendance. *This integrated study runs throughout the text. Issues facing Fast Creek's hockey expansion include (A) managing the arena project; (C) quality of facilities; (D) break-even analysis for food services; (E) location of the new arena: (F) inventory planning of hockey programs; and (G) scheduling of campus security officers/staff for game days. Recurring cases are also available in a separate file for instructors using the PCL. Answer 1: The best method for forecasting the quantity of participants for this situation will be linear regression method. It is because the demand for the year 2018 and 2019 has been asked. With other forecasting method (moving average) the forecast can be done for 2018 but not for 2019. It is because no data for the year 2018 has been given and without that it would not be possible to use moving average method. Also, exponential smoothing cannot be used since no alpha value has been given. Therefore, linear regression will be used. 123 4 56 7 2016-17 8 Slope (b) 9 Intercept (a)| A B C D November E December F January G H February March 2011-12 2012-13 1 34200 39800 38200 26900 35100 2 36100 40200 39100 25300 36200 2013-14 3 35900 46500 43100 27900 39200 2014-15 4 41900 46100 43900 30100 40500 2015-16 5 42500 48200 44200 33900 47800 6 46900 50100 45900 36300 49900 2534.29 2145.71 1560.00 2142.86 3145.71 30713.33 37640.00 36940.00 22566.67 30440.00 10 11 12 2017-18 13 2018-19 14 15 Revenue X November December January February March 7 48453.33 52660.00 47860.00 37566.67 52460.00 8 50987.62 54805.71 49420.00 39709.52 55605.71 November December January February March Cost of 16 2017-18 ticket Cost of 50 $2,422,666.67 $2,633,000.00 $2,393,000.00 $1,878,333.33 | $2,623,000.00 ticket (5% 17 2018-19 increase) 52.5 $2,676,850.00 $2,877,300.00 $2,594,550.00 $2,084,750.00 $2,919,300.00 18 A B C E 10 123456789222317 X November December F January G H February March 2011-12 1 34200 39800 38200 26900 35100 2012-13 2 36100 40200 39100 25300 36200 2013-14 3 35900 46500 43100 27900 39200 2014-15 4 41900 46100 43900 30100 40500 2015-16 5 42500 48200 44200 33900 47800 2016-17 6 46900 45900 Slope (b) 9 Intercept (a)| =SLOPE(D2:D7,$C$2:$C$7) 50100 =SLOPE(E2:E7,$C$2:$C$7) =SLOPE(F2:F7,$C$2:$C$7) 49900 =SLOPE(H2:H7,$C$2:$C$7) -INTERCEPT(D2:D7,$C$2:$C$7)|-INTERCEPT(E2:E7,$C$2:$C$7) | -INTERCEPT(F2:F7,$C$2:$C$7) | -INTERCEPT(G2:G7,$C$2:$C$7) -INTERCEPT(H2:H7,$C$2:$C$7) 36300 =SLOPE(G2:G7,$C$2:$C$7) X November December 2017-18 2018-19 7 -D9+D8*$C$12 -E9+E8*$C$12 January -F9+F8*$C$12 8 =D9+D8*$C$13 -E9+E8*$C$13 =F9+F8*$C$13 February -G9+G8*$C$12 =G9+G8*$C$13 March -H9+H8*$C$12 =H9+H8*$C$13 15 Revenue November December January February March Cost of 16 2017-18 ticket 50 -D12*$C$16 -E12*$C$16 -F12*$C$16 =G12*$C$16 =H12*$C$16 Cost of ticket (5% 17 2018-19 increase) -C16+C16*0.05 -D13*$C$17 -E13*$C$17 -F13*$C$17 -G13*$C$17 -H13*$C$17 18