Question
I am very confused on the following for excel which I am supposed to use the analyzing solver. Please explain how I can be able
I am very confused on the following for excel which I am supposed to use the analyzing solver. Please explain how I can be able to use it.
As a theater manager, you are thinking of opening a Broadway play. It will cost $6 million to develop the show. There are 8 shows per week (assume there is at least one show each day of a week), and you plan to run the show for 100 weeks. It costs $1000 to open the theater each day. Each ticket sells for $50.00. The theater has 800 seats in total, and you expect 80% of the seats to be filled.
1a. Calculate the total profit and return on investment (the total profit divided by development cost)
2a. Depending on economic conditions in the future, you think two additional scenarios are worth consideration. Under a pessimistic scenario, the economy recession will get deeper, and the theater cost per night would be cheaper, at $800, but the ticket price will have to be lower too, at $40, along with a lower percentage of seats filled, 70%. Under an optimistic scenario, the economy will recover shortly, and then you expect the theatre cost per night to be $1100, ticket price be $55, and the percentage of seats filled 90%. Compare the results under these two scenarios with your result in Question (1a).
3a. How does an increase in the percentage of seats filled affect profit? Perform a sensitivity analysis to show how the profit changes as the percentage of seats filled varies from 0 to 100%.
4a. You may choose to run the show for 20 to 120 weeks. Investigate how a joint change in the percentage of seats filled and number of weeks the play runs influences the profit.
5a. Return to the base parameter setting in Question (1a). How many weeks will the show have to run for you to achieve a 100% return on investment?
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