An introduction to management science quantitative - Free Samples

Question: Discuss about the An introduction to management science quantitative. Answer: Introduction: The case is all about the budgeted revenue of Hawthorn Leisure Works (HLW). Hawthorn Leisure Works (HLW) is a fitness centre which also have some space for sports activities they have a tennis court in that space. HLW want to change their revenue structure and for that they want to have a brief analysis between their old and new plan. The old plan of HLW comprised of membership fee and the court fee which is to be paid by the members on the basis of the usage of the court. This task is about the budgeted forecast of revenue of HLW. Budgeting is to be done by the companies to know about the future prospects from the planning of the management or by the implementation of any new plan by them (Anderson, Sweeney, Williams, Camm and Cochran, 2015). Budgets are all based on the past years figures and planning and forecasting which is done by the top management people. Budget estimates the future upcoming things of the companies (Braun, Tietz, Harrison, Bamber and Horngren, 2014). In the present case there are total 2000 members out of them only 70% members want to continue their membership in the plan. They also have some promotional Discounts for their members if they agree to pay the annual membership fee in lump sum amount. Out of those 2000 members 45% members agree to pay the promotional discount. We need to analyse the revenue from old plan and from the new plan. The new plan consists of only membership fee unlike the old plan there is no court fee. The table below is the brief description of the old plan as well as the statement of revenue from the old plan: Annual Membership Fees(Old Plan) Individual $ 45.00 Student $ 30.00 Family $ 100.00 Total Members 2000 Family 1000 Individual 500 Student 500 Peak Tennis Season October to April Court fees Days 181 Capacity (5pm to 9pm) 90%-100% $12 per hour Capacity(9am to 4pm) 50%-60% $8 per hour Off season May to September Days 184 Court Usage(Capacity) 20%-40% $ 6 per hour No. of Courts 10 Court Hours (per day) 12 Old Plan( Revenue) Amount ($) Membership Fees Individual 22500 Student 15000 Family 100000 Court Fees Peak Season 5pm-9pm ($ 12 per hour) 86880 9am-4pm ($ 8 per hour) 69504 Off Season ($ 6 per hour) 52992 Total Revenue 346876 Revenue under New Plan: In this part we need to present the revenues that HWL will earn with the implementation of its new plan. The members who are planning to continue the membership under the new plan are 70% of 2000 that is 1400 and out these 1400 members 45% members are willing to take the promotional offer given by HLW that is they will pay the annual membership fee in the advance for the whole year (Weygandt, Kimmel and Kieso, 2015). The table below presents the new plan of membership fee and the revenue under the new plan: New Plan (Annual Membership Fees) Non Promotional (for complete year) Amount ($) Individual 300 Family 500 Promotional( for complete year) Individual 250 Family 450 New Plan (Revenue) Amount ($) Membership Fees Normal Offer Individual 75000 Family 125000 Promotional Offer Individual 112500 Family 202500 Total Revenue 515000 The above table explains that the revenue from new plan is $ 515000 and the no. of members declined from 2000 to 1400. Still the revenue from the new plan increased in comparison to old plan. Comparison Between new and old plan The changes in the fee structure had some effect on the revenues of HLW but the effect is on the positive side (Edmonds, Edmonds, Tsay and Olds 2016). The revenue from the old plan and new plan are depicted below as we made a comparative analysis of both the old and the new plan: Old Plan( Revenue) Amount ($) Membership Fees Individual 22500 Student 15000 Family 100000 Court Fees Peak Season 5pm-9pm ($ 12 per hour) 86880 9am-4pm ($ 8 per hour) 69504 Off Season ($ 6 per hour) 52992 Total Revenue 346876 New Plan (Revenue) Amount ($) Membership Fees Normal Offer Individual 75000 Family 125000 Promotional Offer Individual 112500 Family 202500 Total Revenue 515000 The above table clearly shows that the revenue under the new plan is much higher than the old plan and there is considerable increase in the revenue under the new plan as compared to the revenue under the old plan (Hawkins, 2015). The assumption made by us is regarding the consumption of court capacity. We had taken the upper range of the court consumption at the time of calculation of court fee. For the calculation of court fee either we need to take the upper range or the lower range or the average of the consumption rate. Choice between old and new plan This analysis is completely based on the decision making that is either to implement the new plan or to continue with the new plan of HLW. The revenue under the old plan is calculated by membership fee and court fee and the revenue under the new plan is comprised of only membership fee. The revenue that we get from the old plan was $ 323492 and the revenue under the new plan is $ 515000. We can conclude that the revenue from the new plan is much higher than the revenue from the old plan. Hence we can conclude that it will be better off for the company to accept the new plan. The key factor we did considered before taking the decision to implement the new plan are: The fall in no. of members with the implementation of the new plan. The increase in membership fee per member. The reduction in the membership with the discontinuance of the court fee. Conclusion: We should implement the new plan as the revenue from the new plan are higher than the old plan. References: Anderson, D.R., Sweeney, D.J., Williams, T.A., Camm, J.D. and Cochran, J.J., 2015. An introduction to management science: quantitative approaches to decision making. Cengage learning. Braun, K.W., Tietz, W.M., Harrison, W.T., Bamber, L.S. and Horngren, C.T., 2014. Managerial accounting. Pearson. Edmonds, T.P., Edmonds, C.D., Tsay, B.Y. and Olds, P.R., 2016. Fundamental managerial accounting concepts. McGraw-Hill Education. Hawkins, A., 2015. Managing budgets pocketbook. Management Pocketbooks. Weygandt, J.J., Kimmel, P.D. and Kieso, D.E., 2015. Financial Managerial Accounting. John Wiley Sons