Our Scenario Opening up these events to spectators generates not only new revenu

Question

Our Scenario
Opening up these events to spectators generates not only new revenues, but also new costs. The presence of spectators changes the liability situation, requiring additional insurance. Spectators sometimes act like slobs, meaning that after the event the Road Atlanta staff will need to do some additional cleanup. Since there is some risk of other misbehavior, they will need more security people. On the other hand, spectators often make purchases from the concession stand and from the Souvenir Shop. Let's speculate on these costs and revenues per race.

There is an advertising cost of $25,000 to bring in the spectators.
Selling tickets at all requires a ticket seller. We will presume a cost of $600 for this person.
The additional insurance cost is estimated at $8,000.
An additional security guard costs roughly $700. We'll guess that they need 1 security guard for each full 500 spectators (in other words, no extra guard for 0-499 spectators, one for 500-999, two for 1000-1499, etc.). [Hint: you can use rounddown function.]
Let's suppose that staff salaries and wages for a race weekend and the following week amount to $15,000. These staff members are employed and paid with or without a race, and with or without spectators. If there are 600 or fewer spectators, they can handle the cleanup. Each additional spectator above the first 600 requires 80 cents worth of overtime. [Hint: use iffunction.]
The snack shop is run by a separate company as a concession. If Road Atlanta gets 30% of the concession's gross revenue and the average spectator spends $12.50 on food and drink, that could be some nice change.
Assume that opening up the Souvenir Shop costs Road Atlanta $1800, that the average dollar of sales brings in 40 cents of margin, and that only 30% of spectators buy anything. If a spectator does buy something, let's guess that he or she will spend around $50.

Incorporate a 100-trial simulation that uses a probability distribution based on three states of weather for a whole weekend.
Rain -20% chance
Partly cloudy -50%
Sunny and warm -30%
Based on an attendance of 2,500:
rain will reduce the attendance by 50%
partly cloudy weather will have no effect
sunny and warm weather will increase attendance by 25%

Simulate the effect of this weather on attendance and report the effect this would have on profit

Answer the following questions assuming that the ticket price is $40.

1. What is the worst profit, and what is the best profit?

Explanation / Answer

Weather - Rain Attendance - 1250 Weather - Cloudy Attendance - 2500 Weather - Sunny Attendance - 3125 Costs Required Amount Costs Required Amount Costs Required Amount Advertising 25000 Advertising 25000 Advertising 25000 Ticket seller 1 600 Ticket seller 1 600 Ticket seller 1 600 Insurance 8000 Insurance 8000 Insurance 8000 Security 3 2100 Security 5 3500 Security 7 4900 Salaries 15000 Salaries 15000 Salaries 15000 Clean up 520 Clean up 1520 Clean up 2020 Souvenir Shop 1800 Souvenir Shop 1800 Souvenir Shop 1800 Total Cost 53020 Total Cost 55420 Total Cost 57320 Revenues Amount Revenues Amount Revenues Amount Snack Shop 4688 Snack Shop 9375 Snack Shop 11719 Souvenir Shop 7500 Souvenir Shop 15000 Souvenir Shop 18750 Spectators 50000 Spectators 100000 Spectators 125000 Total Revenue 62188 Total Revenue 124375 Total Revenue 155469 Profit 9168 Profit 68955 Profit 98149

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