Inventory Proposal: Analysis of University Of Phoenix Demand for Units

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Inventory Proposal University of Phoenix is a for-profit university initiated in 1976 by John Sperling (Kinser, 2006). The university originated in the Phoenix metropolitan area and started with only eight students (Kinser, 2006). Sperling wrote about the origin of University of Phoenix and refers to it as “Rebel with a Cause” (Kinser, 2006, para. 2). Sperling experienced much opposition in getting UOPX in operation to help underserved and hard working adults further their education. Thanks to his determination and confrontational side, Sperling is 88 and can see UOPX having a net worth of $9 billion (Kinser, 2006). University of Phoenix is top on the list of for-profit universities. They enroll more than 230,000 students and have 170 throughout the United States (Kinser, 2006). It is apparent to past critics that universities who provide opportunities for working adults are growing at a rapid rate. More students are leaning to online schools and universities to advance with higher degrees. One thing plaguing the United States is the economy. The cost of tuition is steadily increasing, making it more difficult for students to afford education without the help of scholarships, grants, and student loans. It is said that for-profit universities depend heavily on federally funded students to stay afloat financially (Field, 2011). There are reports and suits filed from past instructors who claim that for-profit universities were making them increase students’ grades to help them pass (Field, 2011). The instructors also said the universities were letting plenty students make repeated offenses in plagiarism, and the instructors were told to mark absent students present (Field, 2011). These actions help the university ratings increase, and the school can get federal aid money. The tuition rates at University of Phoenix are affected by the economy (Kinser, 2006). One reason for the rise in tuition, the enrollment rates differ between the summer and the winter. It is traditional for students to start school in the fall and winter months of a school year. Enrollment rates are less in the spring and especially the summer. The UOPX is in need of finding the median cost of tuition to help students afford to go to college. Once a solution is found, the university hopes this will increase enrollment.
Inventory Management Problem
University of Phoenix has an inventory problem that needs a solution, to solve this problem Team B has discovered that current economic conditions is the university’s problem. Students can no longer afford to attend because of the rise in tuition. The organization must provide a solution to ensure there will be more students who will be able to attend once the solution is in place, and more revenue for the university. The solution that will be in place is to find the median tuition, and see if it can be refined so as to allow the students to be able to afford a college education. There is a difference in enrollment for students in the winter and the summer, so the system is in need of a solution to help the students.
University of Phoenix will implement a plan for increasing the consistency of enrollment. The plan will allow the staff to prepare for future academic needs when enrollments increase. The administration will request for a process to guarantee monthly enrollment for historically low enrollment months. The marketing staff will plan on offering discounted rates to students who will commit to their education during the low enrollment months. The plan will need to address management issues during the low months because there will be an expected increase in students with the new discounted rates. The discounted rates will be announced by 2013, so this gives time to forecast how many students will be willing to accept the discounted rates. This will also allow staff to prepare for future needs based on applicants applying for the discounted loans during the slow months.
Linear Regression Model
Using the slope-intercept formula is useful to identify any potential trends in annual demand of University of Phoenix units. The annual demand for University of Phoenix units from years one through four can be found in Table A. Table A. shows a four-year demand for enrollment at University of Phoenix. The amount of time the business is operable would relate directly to the increase in enrollment over a certain period. The time index must be used to determine how much the enrollment can be expected to increase. The indices allow the UOPX to see the changes between months and years. Forecasting was used to determine the coming year if no change to seasonality effects were to occur.
Table A.
|Monthly Mean and Index for Summer Historical Inventory Data | | | | | |
|Month |Year 1 |Year 2 |
|Spring | |
|March |0.71 |1.21 |
|April |1.4 | |
|May |1.52 | |
| |
|Summer | |
|June |1.36 |1.27 |
|July |1.12 | |
|August |1.34 | |
| |
|Autumn | |
|September |0.71 |0.77 |
|October |0.94 | |
|November |0.65 | |
| |
|Winter | |
|December |0.46 |0.76 |
|January |0.94 | |
|February |0.88 | |

The University of Phoenix Summer Historical Data showed a pattern of higher enrollment during the summer months, and lower during the winter months. Table A. and figure 1 shows how the year is divided by seasons. The demand in the months of October and January do not fall into the trend followed by the rest of the months in the autumn and winter seasons. Both months are irregularities that fall near the mean which is consistent with the average monthly enrollment. The histogram in figure 2 depicts the variation in the monthly index regarding demand for University of Phoenix Units throughout the year.
[pic]
Figure 2. Histogram depicting variation in monthly indices. The months of April through August had the highest demand of units, with monthly indices all greater than 1.0. The months of September through March had the lowest demand for units with monthly indices all below 1.0.

The monthly demand indices shown in figure 3 clearly show the greatest demand in the spring and summer seasons, with the lowest in the autumns and winter seasons.

[pic] Figure 3. Bar Chart depicting monthly demand indices. May had the highest demand of units with a monthly index of 1.52 and December had the lowest with an index of 0.46.
Forecast Using Time Value of Money Concepts Forecasting using the time value of money affects decisions for future requirements. The use of forecasting is valuable. Forecasting allows the business the ability to predict future demands and costs. Forecasting methods range from simple procedures to sophisticated quantitative methods or complex qualitative ones. Methods used for forecasting are varied and have strengths and weaknesses. The commitment to organizational forecasting is growing for businesses. Understanding the limits of forecasting aids in realistic expectations and solutions is necessary to any business. University of Phoenix will use data and indices to determine the future of enrollment plans while using discounted tuition fees. With the included tables/graphs, a forecast for UOPX’s year five can be seen. The forecast varies from month to month and the included proposal shows a plan to make an increase in enrollment more consistent. Based on the charts UOPX can determine a 6.8% demand increase over the actual demand of units in year 4. Using the time value of money concepts management can conclude an increase in profit for the university because of enrollments increasing. The new plan taking effect by 2013 will ensure student enrollments will increase during the slow months. The 6.8% demand will be expected to increase steadily each year by up to 2% more based on future enrollments.

Conclusion

The University of Phoenix is on the right track by using past data to identify shortfalls, and coming up with a plan to fulfill those areas. Using seasonal indices to analyze the inventory data, Team B has forecasted future requirements for the new discount plan to help offset costs during a recession. The one thing the university must pay attention too is the decrease in revenue and the increase in students. The discounts will draw more students in, but this will cause costs for the university to rise because of staffing, materials, and other potential costs. The University needs to find the right balance between how many more students enroll with the discounts, and is it profitable for the University in the future. Forecasting is an amazing tool but the results are not always guaranteed. The University of Phoenix will need to implement the plan and monitor annually to ensure the plan is doing what it was forecasted to do.

References
Barnett, A.G. Dobson, A.J. (2010). Analyzing Season Health Data. Springer.
Field, K. (2011). Faculty at For-Profits Allege Constant Pressure to Keep Students Enrolled. Chronicle of Higher Education, 57(36), A1.
Kinser, K. (2006). What Phoenix Doesn't Teach Us About For-Profit Higher Education. Change, 38(4), 24.
MathBits. (2012). Correlation Coefficient. Retrieved from http://mathbits.com/mathbits/tisection/statistics2/correlation.htm