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but rather, to rely on what we expect to happen as determined by a weighted average
of outcomes. Imagine the difficulty of simulating the specific fortune, or misfortune,
of each game for each of the thousands of attendees.
These assumptions simplify our problem greatly. We can see in Exhibit 7.6 that
the gambling revenue results vary from a low of $33,750 1 for the BT in rainy
weather to a high of $160,000 for OTSD in sunshine. The range of total revenue
(entry fee and gambling revenue for a given weather condition) varies from a low of
$157,500 2 for rainy weather and a high of $420,000 3 for sunshine.
7.4.5 Fr. Efia’s What-if Questions
In spite of having specified the model quite clearly to Voitech, Fr. Efia is still inter-
ested in asking numerous what-if questions. He feels secure in the basic structure
of the games, but there are some questions that remain and they may lead to adjust-
ments that enhance the event’s revenue generation. For example, what if the entry
fee is raised to $15, $20, or even $50? What if the value of each bet is changed from
$50 to $100? What if the odds of the games are changed to be slightly different from
the current values? These are all important questions because if the event generates
too little revenue it may cause serious problems with the Archbishop. On the other
hand, the Archbishop has also made it clear that the event should not take advantage
of the parishioners. Thus, Fr. Efia is walking a fine line between too little revenue
and too much revenue. Fr. Efia’s what-if questions should provide insight on how
fine that revenue line might be.
Finally, Voitech and Fr. Efia return to the goals they originally set for the model.
The model should help Fr. Efia determine the revenues he can expect. Given the
results of the model analysis, it will be up to him to determine if revenues are too
low to halt the event or too high and attract the anger of the Archbishop. The model
also should allow him to experiment with different revenue generating conditions.
This important use of the model must be considered as we proceed to model build-
ing. Fortunately, there is a technique that allows us to examine the questions Fr. Efia
faces. The technique is known as sensitivity analysis . The name might conjure an
image of a psychological analysis that measures an individual’s emotional response
to some stimuli. This image is in fact quite similar to what we would like to accom-
plish with our model. Sensitivity analysis examines how sensitive the model output
(revenues) is to changes in the model inputs (odds, bets, attendees, etc.). For exam-
ple, if I change the entry fee, how will the revenue generated by the model change;
how will gambling revenues change if the attendee winning odds of the WOD are
changed to 30% from the original 35%? One of these changes could contribute
to revenue to a greater degree than the other—hence the term sensitivity analysis.
1 1500 $50 (1–0.55)
..4000 $50 (1–0.20)
$160,000.
2 $60,000 + $48,750 + $33,750 + $15,000 = $157,500 (game revenue plus attendance fee).
3 $160,000 + $130,000 + $90,000 + $40,000
=
$33,750
......
and
......
=
=
$420,000 (game revenue plus attendance fee).
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