The North Star Concert

3 Pages Posted: 21 Oct 2008

See all articles by Sherwood C. Frey

Sherwood C. Frey

University of Virginia - Darden School of Business

Robert L. Carraway

University of Virginia - Darden School of Business

Abstract

The creator of special-event T-shirts has to decide how many shirts to order for an upcoming rock concert. Although she has a best guess and maximum and minimum estimates of attendance at the concert, her decision is complicated by this particular group's history of canceling at the last minute, in which case she would be stuck with all the T-shirts.

Excerpt

UVA-QA-0666

The North Star Concert

For the last six years, Lucinda Ramirez, a project engineer for a major defense contractor, had enjoyed an interesting and lucrative side business—designing, manufacturing, and hawking special-event T-shirts. She had created shirts for a variety of rock concerts, major sporting events, and special fund-raising events. Although her T-shirts were not endorsed by the event sponsors and were not allowed to be sold within the arenas at which the events were held, they were cleverly designed, well produced, and reasonably priced (relative to the official shirts). They were sold in the streets surrounding the arenas and in the nearby parking lots, always with the appropriate licenses from the local authorities. Ramirez had a regular crew of vendors to whom she sold the shirts on consignment for $ 144 per dozen. These vendors then offered the shirts to the public at $ 16 apiece.

Ramirez's T-shirt business grew steadily, and she was generally working on several designs in various stages of development. Currently, she was about to begin producing shirts for a rock concert featuring the band North Star that was scheduled to be staged in two months, and she needed to decide how many shirts she should have stenciled.

If the concert went on as scheduled, it was almost certain to be a success, attendance-wise. Because the stadium—home to a major college football program—could hold over 100,000 people, Ramirez was not concerned about the possibility of a sellout as she could not imagine the concert filling the stadium under any circumstances. But she could easily imagine it being half full, and if wildly successful, possibly as much as 90% full. Yet, her conservative side told her that she should at least consider the possibility that only a quarter of the stadium would be filled—for example, if the weather was bad the night of the concert.

A second key factor in her decision was the percent of the attendees who would buyone of her shirts. Due to her creative designs and the quality of the shirts, that number was frequently in the 10% range of attendees. To help with her planning, Ramirez had pulled data from all the events for which she had provided T-shirts in the last year for a total of 12 events (see Exhibit 1), and the data confirmed her belief that the average was around 10%. Ramirez noted, however, that the percent figure had been as low as 5% and even as high as 18% onone occasion.

. . .

Keywords: Decision analysis, simulation, uncertainty

Suggested Citation

Frey, Sherwood C. and Carraway, Robert L., The North Star Concert. Darden Case No. UVA-QA-0666. Available at SSRN: https://ssrn.com/abstract=912126

Sherwood C. Frey (Contact Author)

University of Virginia - Darden School of Business ( email )

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

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

Robert L. Carraway

University of Virginia - Darden School of Business ( email )

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

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

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