Eagle Airlines
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Eagle Airlines
Business Decisions with Data Models
Assignment on Risk Analysis
Team Members:
Sfykti Dimitra
Goumas Evangelos
Manikas Athanasios
Papaspirou Yiannis
As assigned by Mr. Hadjistelios, President of Eagle Airlines, a simulation analysis is developed in order to evaluate company’s intention to proceed with the purchase of a new aircraft. According to the President’s estimations, the uncertain parameters which affect the annual cash flow are the below;
1. Hours flown
2. Charter Price/Hour
3. Ticket Price/Hour
4. Capacity of Scheduled flights
5. Ratio of charter flights
6. Operating Cost/hour
The main assumption to work upon the scenarios is that the numbers generated for the different variables remain the same across the years. Initially, a base scenario is built and a profit-and-loss account for a typical year of operation is derived using the most likely values of the different parameters.
Upon construction of the base scenario, the optimistic and pessimistic scenarios are also formulated in accordance to the assumptions by the President in respect to possible variations to higher and lower values than the most likely ones used for the base scenario. For all three scenarios, the demand/cash flow is calculated revealing a wide range of values (from €273.180 to -€39.040) among the 3 possible cash flows.
In addition, the one-way sensitivity analysis conducted for all six uncertain parameters demonstrate the impact of each parameter on annual cash flow and by the designation of a scatter plot, we can identify to what range of values every uncertain parameter affects the demand. Upon that, a Tornado diagram is plotted in order to visually demonstrate the range of impact of each parameter. According to the diagram, ticket prices/hour and capacity of Scheduled flights seem to be the two important parameters that most influence the annual cash flow, whereas the ratio of charted flights and operating cost/hour are
Eagle Airlines
Business Decisions with Data Models
Assignment on Risk Analysis
Team Members:
Sfykti Dimitra
Goumas Evangelos
Manikas Athanasios
Papaspirou Yiannis
As assigned by Mr. Hadjistelios, President of Eagle Airlines, a simulation analysis is developed in order to evaluate company’s intention to proceed with the purchase of a new aircraft. According to the President’s estimations, the uncertain parameters which affect the annual cash flow are the below;
1. Hours flown
2. Charter Price/Hour
3. Ticket Price/Hour
4. Capacity of Scheduled flights
5. Ratio of charter flights
6. Operating Cost/hour
The main assumption to work upon the scenarios is that the numbers generated for the different variables remain the same across the years. Initially, a base scenario is built and a profit-and-loss account for a typical year of operation is derived using the most likely values of the different parameters.
Upon construction of the base scenario, the optimistic and pessimistic scenarios are also formulated in accordance to the assumptions by the President in respect to possible variations to higher and lower values than the most likely ones used for the base scenario. For all three scenarios, the demand/cash flow is calculated revealing a wide range of values (from €273.180 to -€39.040) among the 3 possible cash flows.
In addition, the one-way sensitivity analysis conducted for all six uncertain parameters demonstrate the impact of each parameter on annual cash flow and by the designation of a scatter plot, we can identify to what range of values every uncertain parameter affects the demand. Upon that, a Tornado diagram is plotted in order to visually demonstrate the range of impact of each parameter. According to the diagram, ticket prices/hour and capacity of Scheduled flights seem to be the two important parameters that most influence the annual cash flow, whereas the ratio of charted flights and operating cost/hour are