Question

You are the director of an admission office. Your job every year is to decide the number of offer letters to issue to undergraduate degree applicants. For the academic year 2016/2017, the university has a capacity to enroll 7,200 undergraduate students, but you received more than 20,000 applications. However, you know from past year records many students also got offers from other good schools in Canada and the US. The yield rate for this university is far less than 100%.

Assume the university has spent large amount of sunk cost in its undergraduate program for a designed capacity to enroll 7,200 students, such as upgrading classrooms, expanding residential houses, hiring additional teaching instructors and administration staff. As the admission office director, you need to consider following questions:

(a) Will you issue more than 7,200 offer letters for 2016/2017 academic year?

(b) What is the trade-off between issuing more than 7,200 offer letters and issuing exactly 7,200 offer letters?

(c) How to determine the optimal number of offer letters to issue? What information do you need, and how to get such information?

Answer 1

a. Yes I would certainly issue more than 7200 offer letters for 2016-2017 academic year because my yield rate has been far less than 100% and I know from past year experience that students have got offers from other good schools in Canada and the US. Also the fact that I have spent a lot of money to upgrade my school puts extra onus on me to put efforts to ensure that all my sits go full.

b. One of the major tradeoffs in issuing more than 7200 letters and issuing exactly 7200 offer letters is whether I am fine with rejecting extra acceptances at a later date or running the risk of not filling my entire sits since some offer letters wont be accepted. I can certainly minimize my risk by issuing the letters in stages either basis on merit/strength of application or applications that got accepted on first come first serve basis.

c. To get the optimal no of letter, I need to weight in two factors. The yield ratio that I had last year basis which I know that for 7200 seats how many letters I need to give. Further, I need to understand that basis my upgradation done in the college, what marketing activities I have undertaken and hence what % improvement I project in my yield this year round to ensure my application letters are not necessarily following the rule of last year yield

For example, if my seats last year were 7000 (for example) and I gave 10000 offer letters out of which only 6000 finally joined. Which gives me a yield of say 6000/10000 = 60%

Now, due to the efforts made by me this year in upgradation and subsequent marketing activities and hopefully better ranking of my college, I expect the yield to be 80% this year. To ensure that I fill all my seats, I should be sending 7200/80% = 9000 offer letters.

The information that is required is 1) My yield % of last year that I will have for sure

2) The improvement I except to make in yield this year

The second piece of information can be tricky and will require certain level of market survey from both exisitng and prospective students to give an idea of how they perceive the institute today. Also, certain level of marketing activities to ensure that prospective students and their parents know about the revamped institute will be helpful. This will overall result in a confidence metric that can be used as a proxy for improvement in yield % compared to last year