Question.4214 - MGT 553. Risk and Quality Mangement Assignment 2 MgtPlus Inc. MgtPlus Inc. is a company that organizes seminars. Each year, it holds some 90 seminars dealing with finance management and public budgeting themes. In order to encourage early enrollments to its seminars, MgtPlus offers 20 percent discounts to participants who register for a class up to 6 weeks in advance of the date of the seminar offering. Because this is an attractive discount, popular classes usually experience heavy levels of sign-ups before the 6 week pre-seminar cut-off point. Less popular courses experience weaker levels of sign-ups. Table 1 shows data collected on 90 seminar offerings that were tracked by MgtPlus over the past year and a half. Looking at the data, MgtPlus finds that in 15 cases, enrollments were so strong at the six-week marker that they covered all anticipated seminar costs. Typically, these classes resulted in decent profits, although in 2 cases the class had to be cancelled owing to instructor illness. In 36 cases, enrollments were reasonably good at the six-week marker and covered 70-95 percent of the seminar costs. The seminars usually experience some profit, although on 11 occasions classes could not be held owing to insufficient enrollments. In 39 cases, enrollments were weak at the six-week marker, covering less than 70 percent of anticipated seminar costs. Often, these classes did not break even and in a number of cases resulted in substantial losses. On 15 instances, they were cancelled owing to poor enrollments. Break even at six-week marker? Hold seminar? Overall Probability Yes, 15 times (16.7%) Yes, 13 times (86.7%) 0.144 Yes, 15 times (16.7%) No, 2 times (13.3%) 0.022 Almost, 36 times (40.0%) Yes, 25 times (69.4%) 0.278 Almost, 36 times (40.0%) No, 11 times (30.6%) 0.122 No, 39 times (43.3%) Yes, 24 times (62.5%) 0.267 No, 39 times (43.3%) No, 15 times (37.5%) 0.167 Table 1 MgtPlus uses the information contained in this table to track enrollment strength course-by-course. That is, decision-makers use this historical data to determine the viability of current seminar offerings. At the six-week pre-course marker, managers review enrollments and classify a seminar according one of three categories: Break even as of today; almost break even as of today; and not-near-to-breaking-even as of today. Questions Create a decision-tree that will help guide us in determining what action to take when we review student enrollments at the six-week, pre-course marker. Senior management is reviewing past at ten dance at seminars. They want to have an overall understanding of how their seminar marketing efforts are doing. So they ask the following questions, which you should answer: What is the probability that MgtPlus will reach the break-even point at the six week marker and ultimately hold the seminar? What is the probability that MgtPlus will nearly reach the break-even point at the six-week marker and ultimately hold the seminar? What is the probability that MgtPlus will not reach the break-even point at the six-week marker, but winds up holding the seminar nonetheless? Assume the cost of preparing for a typical seminar (including advertising cost) is $ 30,000 and revenue after preparation cost have been netted out is $ 22,000 . When seminars are cancelled, the preparation costs are lost entirely. If at the six-week marker we find that we have reached a break-even point, what is the expected monetary value associated with deciding to hold the seminar? Does it make good business sense to go ahead and hold the seminar? If at the six week marker we find that we are near to reaching a break-even point, what is the expected monetary value associated with deciding to hold the seminar? Does it make good business sense to go ahead and hold the seminar? If at the 6 week marker, we find that we clearly have not reached the break-even point, what is the expected monetary value associated with deciding to hold the seminar? Does it make good business sense to go ahead and hold the seminar? When MgtPlus begins preparing to offer a seminar, what is the probability that the seminar will actually be held?
Answer Below:
MGT xxxx and xxxxxxx Mangement xxxxxxxxxx MgtPlus xxx MgtPlus xxx is x company xxxx organizes xxxxxxxx Each xxxx it xxxxx some xxxxxxxx dealing xxxx finance xxxxxxxxxx and xxxxxx budgeting xxxxxx In xxxxx to xxxxxxxxx early xxxxxxxxxxx to xxx seminars xxxxxxx offers xxxxxxx discounts xx participants xxx register xxx a xxxxx up xx weeks xx advance xx the xxxx of xxx seminar xxxxxxxx Because xxxx is xx attractive xxxxxxxx popular xxxxxxx usually xxxxxxxxxx heavy xxxxxx of xxxxxxxx before xxx week xxxxxxxxxxx cut-off xxxxx Less xxxxxxx courses xxxxxxxxxx weaker xxxxxx of xxxxxxxx Table xxxxx data xxxxxxxxx on xxxxxxx offerings xxxx were xxxxxxx by xxxxxxx over xxx past xxxx and x half xxxxxxx at xxx data xxxxxxx finds xxxx in xxxxx enrollments xxxx so xxxxxx at xxx six-week xxxxxx that xxxx covered xxx anticipated xxxxxxx costs xxxxxxxxx these xxxxxxx resulted xx decent xxxxxxx although xx cases xxx class xxx to xx cancelled xxxxx to xxxxxxxxxx illness xx cases xxxxxxxxxxx were xxxxxxxxxx good xx the xxxxxxxx marker xxx covered x percent xx the xxxxxxx costs xxx seminars xxxxxxx experience xxxx profit xxxxxxxx on xxxxxxxxx classes xxxxx not xx held xxxxx to xxxxxxxxxxxx enrollments xx cases xxxxxxxxxxx were xxxx at xxx six-week xxxxxx covering xxxx than xxxxxxx of xxxxxxxxxxx seminar xxxxx Often xxxxx classes xxx not xxxxx even xxx in x number xx cases xxxxxxxx in xxxxxxxxxxx losses xx instances xxxx were xxxxxxxxx owing xx poor xxxxxxxxxxx Break xxxx at xxxxxxxx marker xxxx seminar xxxxxxx Probability xxx times xxx times xxx times xx times xxxxxx times xxx times xxxxxx times xx times xx times xxx times xx times xx times xxxxx MgtPlus xxxx the xxxxxxxxxxx contained xx this xxxxx to xxxxx enrollment xxxxxxxx course-by-course xxxx is xxxxxxxxxxxxxxx use xxxx historical xxxx to xxxxxxxxx the xxxxxxxxx of xxxxxxx seminar xxxxxxxxx At xxx six-week xxxxxxxxxx marker xxxxxxxx review xxxxxxxxxxx and xxxxxxxx a xxxxxxx according xxx of xxxxx categories xxxxx even xx of xxxxx almost xxxxx even xx of xxxxx and xxxxxxxxxxxxxxxxxxxxxxxxx as xx today xxxxxxxxx Create x decision-tree xxxx will xxxx guide xx in xxxxxxxxxxx what xxxxxx to xxxx when xx review xxxxxxx enrollments xx the xxxxxxxx pre-course xxxxxx Senior xxxxxxxxxx is xxxxxxxxx past xx ten xxxxx at xxxxxxxx They xxxx to xxxx an xxxxxxx understanding xx how xxxxx seminar xxxxxxxxx efforts xxx doing xx they xxx the xxxxxxxxx questions xxxxx you xxxxxx answer xxxx is xxx probability xxxx MgtPlus xxxx reach xxx break-even xxxxx at xxx six xxxx marker xxx ultimately xxxx the xxxxxxx Solution xxxxx even xxxxx at xxx week xxxxxx yes xx Probability xxxxxxx will xxxx yes xx or xxxxxxxxx probability xx Break xxxx and xxxx is xx or xxxx is xxx probability xxxx MgtPlus xxxx nearly xxxxx the xxxxxxxxxx point xx the xxxxxxxx marker xxx ultimately xxxx the xxxxxxx Solution xxxxxx reach xxxxx even xxxxx at xxx week xxxxxx yes xx Probability xxxxxxx will xxxx yes xx or xxxxxxxxx probability xx Break xxxx and xxxx is xx or xxxx is xxx probability xxxx MgtPlus xxxx not xxxxx the xxxxxxxxxx point xx the xxxxxxxx marker xxx winds xx holding xxx seminar xxxxxxxxxxx Solution xxx reach xxxxx even xxxxx at xxx week xxxxxx or xxxxxxxxxxx seminar xxxx hold xxx is xx Therefore xxxxxxxxxxx of xxxxx even xxx hold xx or xx Assume xxx cost xx preparing xxx a xxxxxxx seminar xxxxxxxxx advertising xxxx is xxx revenue xxxxx preparation xxxx have xxxx netted xxx is xxxx seminars xxx cancelled xxx preparation xxxxx are xxxx entirely xx at xxx six-week xxxxxx we xxxx that xx have xxxxxxx a xxxxxxxxxx point xxxx is xxx expected xxxxxxxx value xxxxxxxxxx with xxxxxxxx to xxxx the xxxxxxx Does xx make xxxx business xxxxx to xx ahead xxx hold xxx seminar xxxxxxxx Given xxxxxxx from xxxx seminar xxxx of xxxxxxxxx seminar xxxx from xxxxxxxxx seminar xxx - x Since xxx EMV xx positive xx is xxxx to xx ahead xxx hold xxx seminar xx at xxx six xxxx marker xx find xxxx we xxx near xx reaching x break-even xxxxx what xx the xxxxxxxx monetary xxxxx associated xxxx deciding xx hold xxx seminar xxxx it xxxx good xxxxxxxx sense xx go xxxxx and xxxx the xxxxxxx EMV x - xxxxx the xxx is xxxxxxxx it xx good xx go xxxxx and xxxx the xxxxxxx If xx the xxxx marker xx find xxxx we xxxxxxx have xxx reached xxx break-even xxxxx what xx the xxxxxxxx monetary xxxxx associated xxxx deciding xx hold xxx seminar xxxx it xxxx good xxxxxxxx sense xx go xxxxx and xxxx the xxxxxxx EMV x - xxxxx the xxx is xxxxxxxx it xx good xx go xxxxx and xxxx the xxxxxxx It xx the xxxxxx EMV xx all xxx three xxxx MgtPlus xxxxxx preparing xx offer x seminar xxxx is xxx probability xxxx the xxxxxxx will xxxxxxxx be xxxx Solution xxx probability xxxx the xxxxxxx will xxxxxxxx be xxxx is xxx sum xx the xxxxxxxxxxxxx of xxxxxxx a xxxxxxx from xxxx of xxx enrollment xxxxxx Therefore xx the xxxxxxxxxxx that xxx seminar xxxx actually xx heldMore Articles From Risk and Quality Management
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