Case Study

Case Problem: Capital State University Game-Day Magazines This case draws on material from Chapters 2, 3, 7, and 11.

Capital State University (CSU) is a leading Midwest University with a strong collegiate football program.

Kris Stetzel serves as CSU’s Associate Athletic Director for External Affairs. His job responsibilities include

negotiating with commercial vendors for services such as concessions at sporting events, event staff and

security, and game-day hospitality. Kris brokers deals for corporate sponsorship of CSU athletic programs

and arranges for radio and television coverage of CSU athletic events. Kris also manages CSU sports

advertising and marketing and sports information-related media relations for print, radio, television, and

online.

Recently, Kris has been examining CSU’s business arrangement with the publishing company that prints

the game-day sports magazines for CSU home football games. As part of a recent comprehensive

university-wide sports media contract, CSU has a new publishing agreement with its print vendor. The

magazines typically contain about 60 pages of information on the CSU football team and its opponent for

that week. The magazines are sold at vendor stands positioned outside of CSU’s football stadium.

Currently, CSU places one order in July, several months prior to the first home football game, that states

how many magazines CSU wants for each home game of the season. The publishing company prints the

magazines and ships all magazines to CSU prior to the first game of the season.

From data collected in past football seasons, Kris knows that CSU is often off by a considerable amount in

their order quantities. Most weeks, CSU has many leftover magazines, but because the magazines are

tailored to each home opponent, they cannot be resold in future weeks. In some weeks in previous

football seasons, demand surpassed supply and CSU ran out of football magazines. Currently, CSU

determines order quantities for each home game by looking at the past season’s order quantities and then

Book Title: eTextbook: Business Analytics Case Problem: Capital State University Game-Day Magazines Case Problem: Capital State University Game-Day Magazines

adjusting this amount up or down based on a gut feeling on how popular the current season’s game

would be in comparison to games in the previous season.

 

Kris believes that it should be possible to improve this ordering process. He has located data from the

past nine football seasons. Kris has information on the following variables for each home game: the

number of magazines sold, the year the game took place, the week that the game took place during the

season, the opponent’s preseason ranking, the number of preseason tickets sold for that game, the total

game attendance, CSU’s preseason rank, the number of the home game within CSU’s season, whether or

not the game was an in-conference game for CSU, whether or not the game was Homecoming for CSU, the

game-day weather, the game-day kickoff temperature, the number of wins and losses for CSU’s opponent

in the previous season, and the number of wins and losses for CSU in the previous season. These data are

in the file MagazinesCSU; Table 20.1 displays the data for Years 1 and 2. Kris also noted that the CSU game

in Week 1 of Year 8 was somewhat of an anomaly because CSU wore special throwback uniforms to

honor the players from their only National Championship season, which greatly increased attendance at

that game.

Table 20.1 Portion of Data Available for Use in Determining How Many CSU Football Magazines to Order

Kris has also done some investigation into the costs associated with ordering magazines from CSU’s

publisher. Under the current CSU contract with the publisher, CSU must determine order amounts for

each upcoming home game by July. CSU pays $14.00 for each magazine that they order. Vendors then sell

magazines at each CSU home football game for $25.00. CSU’s agreement with the vendors states that CSU

pays the vendor $2.50 for each magazine sold and keeps the remaining revenue. The current contract

with the publisher states that the publisher must buy back any unsold magazines from CSU for $11.50.

Details

Managerial Report

Use the concepts you have learned from Chapters 2, 3, 7, and 11 to write a report that will help Kris

analyze football magazine sales in Years 1 through 9 to determine an order amount for Year 10. You

should address each of the following in your report.

There is a considerable amount of data available in the file MagazinesCSU, but not all of it may be

useful for your purposes here. Are there variables contained in the file MagazinesCSU that you

would exclude from a forecast model to determine football magazine sales in Year 10? If so, why?

Are there particular observations of football magazine sales from previous years that you would

exclude from your forecasting model? If so, why?

Based on the data in the file MagazinesCSU, develop a regression model to forecast the average sales

of football magazines for each of the seven home games in the upcoming season (Year 10). That is,

you should construct a single regression model and use it to estimate the average demand for the

seven home games in Year 10. In addition to the variables provided, you may create new variables

based on these variables or based on observations of your analysis. Be sure to provide a thorough

analysis of your final model (residual diagnostics) and provide assessments of its accuracy. What

insights are available based on your regression model?

Use the forecasting model developed in Part 2 to create a simulation model that Kris can use to

estimate the total football magazine sales amounts in Year 10. Your simulation model should have

seven uncertain inputs: one input for football magazine sales at each CSU game in Year 10. Then you

should sum these sales amounts for each individual game to create a total football magazine sales

amount for Year 10.

Kris has noticed that of the typical 60 pages in a football magazine, 45 of those 60 pages are the same

for every game in a season. Only the 15 pages that discuss the weekly opponent change from week-

to-week. CSU’s publisher has indicated that it is possible for CSU to order generic game-day football

magazines in the July preceding the season. This generic magazine contains the 45 pages of material

that is the same for each game. Closer to the week of each game, CSU could then tailor the generic

magazine with inserts specific to that week’s game, along with a book jacket cover displaying

players and coaches from the two teams playing that week. The number of game-specific inserts and

book jacket covers can be determined closer to the actual games in order to allow for a more

accurate forecast.

Thus, the simulation model developed in Part 3 effectively represents the sales amount for the

generic magazine, and then CSU would order the game-specific inserts and book jacket covers much

closer to the actual games when they have a much more accurate forecast of attendance and sales.

However, Kris still is not sure how many generic magazines he should order. Should he order

exactly the forecasted amount from Part 3? More? Less? Why? Based on the cost values described

from the publishing contract, if Kris orders 21,500 generic magazines in July, what are the estimated

expected costs of lost sales (football magazines that CSU does not sell because they run out) and

unsold magazines (football magazines that CSU must send back to the publisher at the end of the

season)?

Assuming that CSU can tailor the specific magazines for each game in Year 10 at a later date, what is

the optimal order amount for Kris to place in July prior to Year 10 for the generic magazines? The

optimal order amount should minimize the total expected lost sales and unsold magazines cost in

Year 10? Assume that Kris must order in batches of 500 magazines.