ANALYTICS & DECISION
MAKING
Summer School
Case Studies Across Five Domains
TABLE OF CONTENTS
Section 1 Marketing Analytics Cases 1 & 2 — Pricing strategy, segmentation, brand
positioning
Section 2 Financial Analytics Case 3 — Portfolio Optimization, Decision trees, EMV,
market uncertainty
Section 3 Operational Cases 4, 5 & 6 — Scheduling, production planning,
Analytics workforce optimization
Section 4 Human Resource Case 6 — Workforce hiring, firing, cost minimization
Analytics
Section 5 Decision Making Case 3 — Strategic choices under uncertainty
Marketing Analytics
M A R K E T I N G A N A L Y T I C S
Case 1: Pricing Dilemma at Filli Café
When it comes to pricing strategy, Filli Café must carefully balance maximizing
profit margins with increasing burger sales volume. Signature burger offerings
with premium ingredients may command higher prices, attracting customers
willing to pay for quality and unique flavors. On the other hand, Filli may offer
discounts during special events, catering to price-sensitive customers seeking a
good deal.
To optimize sales and profits, Filli can employ demand planning to forecast
demand for their burgers at different price points. Historical sales data can help
estimate demand for signature burgers at regular and discounted prices during
promotional events, enabling effective inventory management.
Quantitative Parameters
The following statistical parameters define the pricing environment for both
regular and promotional channels:
Channel Average Price Std Deviation Market Size
(AED) (AED) (Units)
Regular Pricing 20.00 2.00 1,500
Promotional Event 16.00 1.80 1,200
Assume that prices follow a normal distribution for both regular and promotional
events.
Required Analysis
(a) Illustrate the answer with appropriate diagrams and decision-making zones.
Clearly specify the size of each customer segment: bottom, middle, and higher.
(b) How might Filli balance the need to maximise profits with the risk of
alienating customers who are not willing to pay premium prices for their
burgers? What factors should they consider when making pricing decisions?
(c) During promotional events, how can Filli maximize revenue while also
maintaining brand value and customer loyalty? What tactics might they use to
incentivize customers to make purchases during the promotion without
sacrificing profits or devaluing their brand?
M A R K E T I N G A N A L Y T I C S
Case 2: Lacoste T-Shirts — Navigating Dual Market
Dynamics
Background
Lacoste, the iconic fashion brand, has always walked the fine line between
premium aspiration and accessible fashion. Its T-shirts, considered both a
lifestyle symbol and a wardrobe essential, are retailed through two channels —
Factory Outlets and Seasonal Sale Outlets.
Channel Pricing Data
Channel Average Price Std Deviation Units Allocated
(USD) (USD)
Factory Outlet $120 $17 22,000
Seasonal Sale Outlet $75 $16 28,000
Total market size: 50,000 pieces across both channels.
Consumer Segments
These two channels are creating three distinct consumer segments:
• Segment I — Value Hunters: Customers only interested when the price
falls below the lowest levels of the factory outlet.
• Segment II — Prestige Seekers: Customers only interested when the price
is above the upper limit of the Seasonal Sale.
• Segment III — Pragmatic Middle: A large share of consumers who are
flexible across both channels depending on perception of value.
Strategic Context
The leadership team is debating whether Lacoste should reinforce its premium
identity by tightening seasonal discounts or strategically lean into its dual
channel play to maximize market penetration.
Required Analysis
(a) Probability Segmentation: What proportion of demand (in units) falls into
Segment I, Segment II, and Segment III? Use the normal distribution curves of
both channels to segment customers.
(b) Overlap & Trade-Offs: How many T-shirts are likely to be picked
exclusively at Factory Outlets, exclusively at Seasonal Sales, and how many
remain contestable by both segments?
(c) Diagrammatic Decision Zones: Illustrate both normal distributions on a
graph and mark decision-making boundaries (Zone I, II, III). Show overlap areas
where consumer choice may swing between Factory and Seasonal Sale.
(d) Strategic Question: If Lacoste reduces the discount depth (raising
Seasonal Sale average to $85), how would this shift the three consumer
segments? Would it strengthen brand equity or reduce total sales volume?
(e) Customer Segmentation Insight: If psychographic data suggests
Segment II buyers (Prestige Seekers) are also brand evangelists, what marketing
and pricing strategy should Lacoste prioritize, even if Segment I (Value Hunters)
delivers higher short-term volume?
(f) Risk & Scenario Analysis: Suppose supply chain constraints limit total
availability to only 40,000 pieces instead of 50,000. How should Lacoste
prioritize allocation between the two outlets to maximize both profitability and
long-term customer loyalty?
S E C T I O N 2
Financial Analytics & Decision
Making
Case 3: The Unique Candle Company
The Unique Candle Company has successfully developed and patented a
proprietary process for manufacturing premium aroma candles. With an
exclusive patent in hand, management must now decide on the best strategy to
capitalize on this innovation. The decision involves weighing certain but modest
returns against potentially higher — but uncertain — rewards from entering the
market.
Strategic Options
Management has identified three mutually exclusive courses of action:
• Sell the Patent — License or sell the patent outright to a third party
without any market involvement.
• National Launch — Manufacture and market the aroma candle nationally
without any prior market testing.
• Test Market First — Pilot the product in a limited geographic area, then
decide whether to sell the patent or proceed with a full national launch
based on the test results.
I. Gross Margin by Market Condition
Market Condition Gross Margin
Good Market $400,000
Fair Market $100,000
Poor Market $10,000
II. Marketing Costs
Activity Cost
Test Marketing (limited area) $15,000
National Promotion $50,000
III. Patent Sale Value by Scenario
Scenario Sale Value
Without test marketing $30,000
Following a favorable test result $60,000
Following an unfavorable test result $10,000
IV. Probability of Test Market Result
Test Outcome Probability
Favorable test result 0.60
Unfavorable test result 0.40
V. Probability of Market Perception by Scenario
Scenario Good Market Fair Market Poor Market
Without test marketing 0.40 0.30 0.30
Following a favorable test 0.40 0.40 0.20
Following an unfavorable test 0.30 0.30 0.40
Required Analysis
(a) Construct a decision tree that maps out all possible strategic paths, chance
events, and outcomes for the Unique Candle Company.
(b) Calculate the Expected Monetary Value (EMV) for each decision node,
working from right to left (rollback method).
(c) Identify the optimal strategy and state clearly which action the company
should take to maximize its expected return.
(d) Interpret the results: What does your analysis reveal about the value of
market information in this case?
F I N A N C I A L A N A L Y T I C S
Case 4: Portfolio Optimization — Horizon Capital
Horizon Capital is an investment firm planning to allocate funds across three
independent stocks. Management seeks to construct a minimum variance
portfolio subject to a target return constraint and individual asset concentration
limits.
Stock Data
Parameter Stock A Stock B Stock C
Mean Annual Return 0.12 (12%) 0.16 (16%) 0.20 (20%)
Standard Deviation 0.15 (15%) 0.24 (24%) 0.32 (32%)
of Return
Note: Assume all three stocks are uncorrelated (all pairwise correlations = 0).
Investment Constraints
• Total capital available: $10,000.
• Maximum allocation to any single stock: 60% of total capital.
• Minimum required expected annual return: 12%.
Required Analysis
(a) Formulate the quadratic program to determine the minimum variance
portfolio satisfying the return constraint and concentration limits.
(b) Determine the optimal investment allocation across Stock A, Stock B, and
Stock C.
(c) State the minimum portfolio variance achieved and interpret the result in
terms of the risk-return trade-off.
S E C T I O N 3
Operational Analytics
O P E R A T I O N A L A N A L Y T I C S
Case 4: Worker Scheduling at the Post Office
A regional post office operates seven days a week and must maintain sufficient
staffing each day to handle mail volume. Management is evaluating how to staff
operations using full-time employees in a cost-efficient manner, while remaining
compliant with existing union agreements.
Union Agreement
The collective bargaining agreement stipulates the following conditions for all
full-time staff:
• Each employee must work exactly five consecutive days per week.
• After five working days, each employee is entitled to two consecutive days
off.
• This cycle repeats weekly without exception.
Example: An employee beginning on Monday works Monday through Friday, with
Saturday and Sunday off. An employee beginning on Wednesday works
Wednesday through Sunday, with Monday and Tuesday off.
Minimum Daily Staffing Requirements
Day Monda Tuesda Wednes Thursd Friday Saturd Sunda
y y day ay ay y
Min. 17 13 15 19 14 16 11
Employees
Part A — Minimizing the Number of Employees
Management wishes to determine the minimum number of full-time employees
required on the payroll to meet all daily staffing requirements throughout the
week. Only full-time employees (subject to the union agreement) are to be
considered.
Part B — Minimizing Weekly Payroll Cost
Management wishes to refine the model by incorporating differential pay rates
that reflect the higher cost of weekend staffing. The revised objective is to
minimize the total weekly wage bill rather than simply the headcount.
Pay Category Rate Daily Cost (8-hour shift)
Weekday (Monday – Friday) $10 per hour $80
Weekend (Saturday – $15 per hour $120
Sunday)
Required Analysis
(a) Formulate and solve the linear program that minimizes total headcount (Part
A).
(b) Reformulate the model to minimize total weekly payroll cost (Part B).
Determine whether the plan optimal under Part A remains optimal under this
revised criterion.
O P E R A T I O N A L A N A L Y T I C S
Case 5: Surfs Up — Production Planning & Inventory
Management
Surfs Up is a specialist manufacturer of high-end surfboards, serving both the
recreational and competitive surfing markets. The production facility operates
under a fixed monthly output ceiling of 50 boards — a constraint arising from
workshop floor space, curing and finishing equipment capacity, and the skilled
production team's throughput limits.
The Seasonal Demand Challenge
Demand is concentrated in a narrow peak season (May through September),
which production capacity, even at full utilization, can only partially meet in real
time. During peak summer months, demand substantially exceeds monthly
production capacity; in the winter off-season, demand falls well below minimum
viable output. Surfs Up must therefore produce ahead of demand, building
inventory that can be drawn down during peak season.
Financial Parameters
Item Value Notes
Production cost per $125 Variable cost: applies to every unit
board produced
Selling price per board $200 Revenue per unit sold
Contribution margin per $75 Revenue minus production cost
board
Inventory holding cost $5 / board/month Storage + opportunity cost of capital
Monthly production 50 boards maximum Hard upper limit on production
capacity
Opening inventory 5 boards Physical stock on hand at start of
(January) period
Safety Stock Policy
Period Months Minimum Ending Inventory
Warm Season May – September 10 boards
Off-Season October – April 5 boards
Monthly Demand Forecast
Month Jan Feb Ma Apr Ma Jun Jul* Au Sep Oct No De
r y* * g* * v c
Forecast 10 14 15 20 45 65 85 85 40 30 15 15
Month Jan Feb Ma Apr Ma Jun Jul* Au Sep Oct No De
r y* * g* * v c
(units)
* Warm season months. Total annual forecast: 439 boards. Maximum annual
output: 600 boards. Timing of production relative to demand requires careful
planning.
Required Analysis
(a) Formulate a linear program to maximize total profit contribution across the
12-month planning horizon, subject to capacity, safety stock, and inventory
balance constraints.
(b) Determine the optimal month-by-month production schedule and ending
inventory levels.
(c) Calculate the maximum achievable profit for the year and identify which
months drive the binding constraints.
S E C T I O N 4
Human Resource Analytics
O P E R A T I O N A L A N A L Y T I C S & H U M A N R E S O U R C E
A N A L Y T I C S
Case 6: Cool Power Corporation — Workforce Planning
Cool Power Corporation manufactures air conditioning units for large commercial
properties. The company faces a recurring operational challenge: demand for its
products is highly seasonal, with construction activity peaking in spring and
summer and weather-driven replacement cycles ahead of peak summer
temperatures. These forces produce significant month-to-month variation in the
labor hours required on the production floor.
Current Workforce Status
At the start of the planning period, Cool Power has 10 fully trained manufacturing
employees who are experienced, productive, and immediately available.
Management must determine how to scale this workforce up or down, and in
which months, to meet forecast demand at the lowest possible total cost.
Workforce Policies & Constraints
• All employees (both trained and trainees) receive a uniform monthly wage
of $4,000, regardless of hours worked or productivity.
• Fully trained employees contribute 160 productive labor hours per month.
• New trainees may be hired at the start of any month. In their first month,
a trainee contributes only 100 productive hours.
• After one month, a trainee is reclassified as a fully trained employee.
• Hiring cost: $2,500 per new trainee (one-time, in addition to the monthly
wage).
• Severance pay: $2,000 per dismissed employee (fully trained only;
trainees must complete their first month before becoming eligible for
dismissal).
• End-of-year requirement: a minimum of 12 fully trained employees must
remain on the payroll at year-end.
Monthly Labour Requirements
Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct No De
v c
Required 1,6 2,00 2,00 2,00 2,80 3,20 3,60 3,20 1,6 1,2 80 80
Hours 00 0 0 0 0 0 0 0 00 00 0 0
Cost Parameters
Cost Element Amount Applies To
Monthly wage $4,000 / employee All trained employees & trainees
Hiring & training cost $2,500 / new hire Trainees only (one-time)
Severance pay $2,000 / dismissed Fully trained only
employee
Productive hours — 160 hrs/month Fully trained employees
trained
Productive hours — 100 hrs/month First month only
trainee
Required Analysis
(a) Formulate a linear program that minimizes total workforce cost over the 12-
month planning period, subject to monthly labor demand, training constraints,
and the end-of-year headcount requirement.
(b) Determine the optimal hiring and firing schedule for each month.
(c) Calculate the minimum total cost achievable across the planning horizon and
identify the key cost drivers.