First) ONLINE ANALYTICAL PROCESSING
a) What is the fact of interest being analyzed?
ANSWER 1A:
According to the question asked with respect to the Quest Travel Company, the fact of interest on that analysis was made in order to identify that which tour category generates more gross sales revenue, and what are the trends that have the potential to generate more sales in future and how many customers would increase in their customer base in what state. It would make the company to arrange more tour in those states where sales would tend to grow and it would lead them to generate more revenues.
b) What are the three necessary dimensions to perform this analysis?
ANSWER 1B:
The three dimensions that were used to perform that analysis include: gross sales revenue, market share and the cost reduction. This would be achieved by the analysis that has been performed already.
Gross sales revenue would be determined by the number of tickets sold for the tour and number of customers who approach them for the tour. In addition, reduction in cost would depend on the number of tour the company would make, which would result in determining the customer base that was also the market share as the number of customers would increase the market share.
c) What are the hierarchies for each of these dimensions? It may be that some dimensions do not have hierarchies.
ANSWER 1C:
The hierarchy that would be made on the basis of the dimension discussed above are entertaining each other show below:
Second) Write a report to Jeff Wiemann summarizing the results of this analysis. Be sure to address the following in your report?
ANSWER 3:
Rationale for conducting the sensitivity analysis:
Sensitivity analysis is the method used for determining the change that how an independent variable value will change and affect the value of an independent variable using the given assumptions and this method is used with limited boundaries assigned with it and is entirely depends upon the input variable. Sensitivity analysis is often used in investment appraisal for those projects, which are under the situation of uncertainty and it is a calculation method used for forecasting the input variable data for the result as output.
San Diego School District uses the sensitivity analysis to assess the productivity of their employees by putting more investment the cost benefit analysis, which helps in improvement of the productivity either fruitful or not. The School District uses the sensitivity analysis to assess the productivity that how much it could be improved with respect to the Clerical staff and with respect to principle employees.
Results of sensitivity analysis:
Total initial investment cost of the project is $1,820,000 that will result in saving of hard cost of $3,316,709 and for achieving target NPV of $3,983,259. Further, the company must have to achieve minimum 5.5% increase in efficiency in clerical productivity and 2.5% increase in principal productivity. Following are different NPVs at different levels of increasing efficiencies in clerical and productivity. In the table below, an increase in productivity principle is representing the first row starting with the 1% change to 2.75% and the left column is representing the increase in productivity in clerical starting with 5.5% efficiency and increasing to 7.5% efficiency.
|
1.00% |
1.25% |
1.50% |
1.75% |
2.00% |
2.25% |
2.50% |
2.75% |
|
|
5.5% |
3,721,409 |
3,772,272 |
3,823,134 |
3,873,997 |
3,924,859 |
3,975,722 |
3,983,260 |
4,077,447 |
|
6.0% |
3,905,159 |
3,956,022 |
4,006,884 |
4,057,747 |
4,108,609 |
4,159,472 |
4,210,334 |
4,261,197 |
|
6.5% |
4,088,909 |
4,139,772 |
4,190,634 |
4,241,497 |
4,292,359 |
4,343,222 |
4,394,084 |
4,444,947 |
|
7.0% |
4,272,659 |
4,323,522 |
4,374,384 |
4,425,247 |
4,476,109 |
4,526,972 |
4,577,834 |
4,628,697 |
|
7.5% |
4,456,409 |
4,507,272 |
4,558,134 |
4,608,997 |
4,659,859 |
4,710,722 |
4,761,584 |
4,812,447 |
Recommendation:
Jeff Wiemann should consider the minimum investment to invest for increasing the efficiency of both Principle and Clerical department, which should be about $3,983,260. At this level, the efficiency of both departments would increase by 2.75% for Principle and 7.5% for Clerical department. At this stage, the minimum cost would be $3,983,260 ......................
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