Lac Leman Festival De La Musique (a)

4 Pages Posted: 21 Oct 2008 Last revised: 14 Sep 2019

See all articles by Samuel E. Bodily

Samuel E. Bodily

University of Virginia - Darden School of Business

Robert Jenkins

University of Virginia - Darden School of Business

Abstract

The organizers of a music festival may use video from the Friday concert to create a DVD to sell to those who come to the Saturday concert. Attendance on Saturday is uncertain, as is the percentage of those who attend on Saturday who will buy the DVD. Is this a good project? If so, what number of DVDs should be burned early Saturday morning and offered for sale at that evening's performance? By that time, Friday attendance is known, as well as whether it rained on Friday, and there is a forecast for whether it will rain on Saturday. Historical information on these variables may help us predict Saturday attendance using multiple regression; together with the results of a marketing survey, such analysis will help us make better purchasing decisions. This case series (see also the B case, UVA-QA-0708) can be used to illuminate a multitude of concepts that are covered in basic decision-analysis courses. The series starts by examining the role of uncertainty in decision-making, proceeds through the estimation of probability distributions from sample data with multiple regression, culminates in the development of a full decision model, and ends with a qualitative and quantitative analysis (with a tornado diagram) of how to add value and reduce risk. Key pitfalls for students are failing to recognize both limits on sales (supply and demand), incomplete reasoning in the determination of the attendance probability distribution, and oversimplifying the full forecast model.

Excerpt

UVA-QA-0707

Rev. May 2, 2019

Lac Leman Festival de la Musique (A)

A beautiful idea came to Carla Monte, director of the Lac Leman Festival de la Musique, as she took a long bicycle ride around the east end of Lac Leman. Her idea was as lofty as the Swiss Alps she saw in the distance. She realized that, because the festival ran for two nights, she could videotape Friday's performance, which included every performer in the festival, and sell DVDs at Saturday's performance. As she pushed her bike onto the ferry to return from St. Gingolph, her mind and spirit rejuvenated by the crisp Alpine air, she fleshed out the project's process and logistics.

Her contracts with the performers gave her the right to record and sell the video at the festival site only; come Sunday, any unsold DVDs would be worthless. The contractual limitations made an investment in a DVD risky. Worse yet, it was difficult for Monte to know in advance how many concertgoers would attend the festival on Saturday, or what percentage of the attendees might purchase the DVD.

With the festival only a month away, Monte asked her assistant for business development, Hekka Fyno, to collect some data and do a preliminary analysis. Fyno had just completed an executive MBA program in Scandinavia and was excited by this new project. He produced the data (Exhibit 1), which showed Saturday attendance for the festival's entire 15-year run, and delivered it to Monte, commenting:

. . .

Keywords: decision analysis, probability distribution, decision variable search, regression, tornado diagram

Suggested Citation

Bodily, Samuel E. and Jenkins, Robert, Lac Leman Festival De La Musique (a). Darden Case No. UVA-QA-0707. Available at SSRN: https://ssrn.com/abstract=1284279

Samuel E. Bodily (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4813 (Phone)
434-293-7677 (Fax)

HOME PAGE: http://www.darden.virginia.edu/faculty/bodily.htm

Robert Jenkins

University of Virginia - Darden School of Business

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

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