City Symphony Orchestra

870 Words Nov 12th, 2010 4 Pages
Case: City Symphony Orchestra
The City Symphony Orchestra is a branch of the Center for Performing Arts. It performs regular concerts throughout the year and has been reasonably profitable in the past. However, in recent years, concert attendance has been declining and the Orchestra is looking for ways to boost attendance.
The traditional customers of the Orchestra have been the older and more affluent segment of the population that live in the suburbs. The recent boom in the high-tech sector, however, has created an affluent population that is younger and has different musical tastes. This younger affluent group prefers to live in the city rather than commute from the suburbs. Older people concerned about crime in the downtown
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Since this is a new direction with no prior sales history, the director of the
Orchestra, Sarah Bernhardt, is concerned about the certainty of ticket sales. She has asked the box office manager to provide some sense of how sure he is that 141,000 tickets can be sold. She wanted to know the range of ticket sales so she could assess the risk the
Orchestra faces. The box office manager has provided the following additional information. CITY SYMPHONY CASE EXHIBITS
Table 1
City Symphony—Proposed Season
Concert Type Average Ticket Price Number of Nights Tickets Sold Variable Cost/Night
Beethoven & Brahms $35 30 30,000 25,000
Mozart 30 30 45,000 27,500
Contemporary Pop 20 30 66,000 30,000
Total 90 141,000
Total Fixed Costs $1,000,000
Table 2
City Symphony—Range of Sales for Current Mix*
Ticket Sales Probability of sales
100,000 15.00%
120,000 30.00%
140000 40.00%
160,000 15.00%
100.00%
Table 3
City Symphony—Alternate Proposal
Concert Type Average Ticket Price Number of Nights Tickets Sold Variable Cost/Night
Beethoven & Brahms $35 20 20,000 25,000
Mozart 30 30 45,000 27,500
Contemporary Pop 20 40 88,000 30,000
Total 90 153,000
*The probability distributions in Tables 2 and 4 represent a simplification. In a real situation, we would compute the probability distribution of sales for each type of concert and the sum of the expected sales for each concert would be the
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