In: Operations Management
You are the director of 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 school has a capacity to enroll 7,200 undergraduate students, but the school is so popular that you received more than 20,000 applications. However, you know from past year records many students not only got offer from UBC but also from other good schools in Canada and the US. The yield rate for the school is far less than 100% (the ‘yield rate’ refers to the proportion of students accept the school offers among all the students to whom UBC issue the offer letters). Assume the school 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. (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?
Questions that need to be answered are-
(a) Will you issue more than 7,200 offer letters for 2016/2017 academic year?
Ans- Yes, I will be issuing more than 7,200 offer letters for 2016/2017 academic year. The reason being is that the yield rate has been far less than 100% over the years. Hence, considering the huge investment made in the form of sunk cost in the infrastructure, it will be wise to issue more than 7,200 offer letters so that if any seat remains vacant then the waiting listed students can get admission on the vacant seats and consequently the institution could be saved from the potential loss.
(b) What is the trade-off between issuing more than 7,200 offer letters and issuing exactly 7,200 offer letters?
Ans- If exactly 7200 offer letters are being issued then if the yield rate remained below 100%, which usually has been happening over the years, and then there will be wastage of the resources of institution. And in that case the institution will suffer loss because of the huge investment made in the form of sunk cost.
On the other hand, if offers letters are being issued more than 7200 then if the yield rate becomes 100% then there will emerge a very serious challenge to accommodate all the students in the institution.
(c) How to determine the optimal number of offer letters to issue? What information do you need, and how to get such information?
Ans- We should use the historical data to determine the optimal number of offer letters to issue. We can see a trend in the yield rate of previous years and on this basis we can decide how many offer letters will be optimal to offer.
For this we will need historical data of the total number of applicants in the previous years, the total number of offer letters issues, and the yield rate of previous couple of years and on the basis of these data we can easily deduce how many offer letters would be optimal to issue.