Quantitative Methods for Business Essay

In January 2008, Northern Airlines structured with selenium Airlines to create the fourth largest U.S. carrier. The new North-South Airline inherited both(prenominal) an aging buy the farm of Boeing 727-300 aircraft and Stephen Ruth. Stephen was a tough former secretary of the navy who stepped in as new president and chairman of the board.Stephens foremost concern in creating a financially solid company was support costs. It was commonly surmised in the airline industry that maintenance costs insurrection with the advance of the aircraft. He quickly noticed that historically there had been a significant difference in the reported B727-300 maintenance costs (from ATA degree 41s) both in the airframe and locomotive engine areas amid Northern Airlines and Southeast Airlines, with Southeast having the newer happen.On February 12, 2008, rowlock Jones, vice president for operation and maintenance, was called into Stephens office and asked to study the issue. Specifically, Step hen wanted to know whether the ordinary fleet age was correlated to direct airframe maintenance costs, and whether there was a relationship between bonnie fleet age and direct engine maintenance costs. Peg was to report back by February 26 with the answer, along with quantitative and lifelike descriptions of the relationship.Pegs first step was to have her staff fabricate the clean age of Northern and Southeast B727-300 fleets, by quarter, since the introduction of that aircraft to serve by to each one airline in late 1993 and early 1994. The average out age of each fleet was calculated by first multiplying the sum up number of calendar days each aircraft had been in service at the pertinent point in time by the average day-after-day utilization of the respective fleet to total fleet hours flown. The total fleet hours flown was then divided by the number of aircraft in service at that time, giving the age of the average aircraft in the fleet.The average utilization was re ar by taking the actual total fleet hours flown on family line 30, 2007 form Northern and Southeast data, and dividing by the total days in service for all aircraft at that time. The average utilization for Southeast was 8.3 hours per day, and the average utilization for Northern was 8.7 hours per day. Because the available cost data were calculated for each yearly period ending at the end of the first quarter, average fleet age was calculated at the same points in time. The fleet data are shown in the following table. Airframe cost data and engine cost data are both shown paired with fleet average age in that table.