Decision Modelling: Case Study of Cunningham Holdings

This report focuses on the decision-making process of Cunningham Holdings, a family-run organization in the hospitality industry. It analyzes different project models and recommends the most suitable option for the company.

Decision modelling
Case study of Cunningham Holdings
Student Name
Institution Name
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Introduction
For a firm to ensure high quality and transparent decision making, there is need to
continuously analyse the firm’s decision-making procedure. Failure to have an efficient decision-
making process may leave the firm running in prejudice; that is the assumption that it is
operating effectively when that is not the reality. It is thus necessary for all the parties engaged in
decision making to have strong knowledge of the organisation’s mission, vison as well as the
long-term strategic goals. The firm have to dedicate a lot of resources to its planning, designing
and implementation of a decision support system. Decision making is an important but rather
complex aspect of the firm, all the employees of an organisation are tasked with decision making
at some points in their roles.
The aim of this report is to focus on the decision-making process of Cunningham’
holdings. This is a family run organisation that offers hospitality services. The company’s
strategic decision is based on the firm’s vison that fronts sustainability as a key element to the
future wellbeing of the firm. The construction of the golf resort is aimed at developing the rural
economies. For this reason, the firm is to initiate the project in a remote area which means the
decision making is based on estimation of costs. The CEO of the firm has done an intensive
research and obtain information which also includes the features and enjoyment index of the golf
holes. As the senior business analyst of Cunningham holdings, I was tasked with the analysis of
the present information and modelling the best project that ought to be implemented by the
company. This report is therefore a summary of the findings of the analysis and a
recommendation of the best path the company should follow.
Implementation of the models
To evaluate the most appropriate project model for the company, 5 models were
developed to accommodate different positions of the organisation. The first model was the
standard clubhouse model. This model entailed the managers plan to construct a standard
clubhouse inside the golf resort at a cost of $ 3.5 million. Another model was the exclusive
clubhouse model which entails the shareholders’ request for an exclusive clubhouse to be
constructed instead at a cost of $ 6 million. In addition to the two models were three other
models termed option 1 to 3 which tried to modify the exclusive club model to see how effective
the model might be. The models displayed in details in the attached excel document. Out of the
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three models two were identified not to be viable to the firm; this is the exclusive clubhouse
model and option 1 to the exclusive clubhouse model. When this two were generated using the
solver add-in in excel, no feasible position was identified. This is to mean the models could not
be implemented by the firm due to resource constraints. Only three models were observed to be
viable and they are explained in the next chapter.
Analysis of the feasible models
Feasibility of linear model means that the model did generate an optimum point at which
all the constraints are met. This are the models that can be implemented by the firm with no
resource or legal constraint expected in the near future. In this analysis three models were
identified to be feasible; that is the standard model, option 2 and option 3 to the exclusive
clubhouse model.
The standard clubhouse model
This model caters for the managers plan to construct a standard clubhouse at a cost of $
3.5 million and covering a space of 2 hectares. The plan when modelled indicates that accepting
the standard clubhouse model will mean the company have to spend a total of $ 19.05 million to
put the golf resort in place. In addition, a land area of 40.75 will be needed. Furthermore, the
plan will yield an enjoyment index of 35. Adhering to this model will entail constructing the golf
holes in a configuration described by the table below.
Kind of golfing
hole
Straight par
5
Dogleg par
5
Straight par
4 Dogleg par 4
Long
par 3
Short par
3
Number of holes 1 1 2 10 1 3
Exclusive clubhouse model option 2
The request by the managers for the firm to construct an exclusive clubhouse covering 4
hectares at a cost of $ 6 million cannot fit the current budget of the firm which is $ 20 million. It
was thus necessary to modify the features of the clubhouse to make it more acceptable to the
shareholders while at the same time cost friendly to the firm. This option thus reduces the cost of
constructing the clubhouse to $ 5.1 million. Implementation of the model indicates that the firm
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will have to spend a total of $ 20 million to construct the golf resort in addition to a land size of
40.75 hectares. In return the resort will yield an enjoyment index of 36.5. The golf holes
configuration of the resort should be as displayed in the table below.
Kind of golfing
hole
Straight par
5
Dogleg par
5 Straight par 4
Dogleg par
4
Long par
3
Short par
3
Number of holes 2 1 7 4 1 3
Exclusive clubhouse model option 3
This model entails accepting the initial request of the shareholders, but to make the model
viable, the firm will have to increase its budget for the golf resort project to $ 20.8 million.
Modelling these scenarios in excel did indicate that the firm will need a total of $ 20.8 million to
put the project in place in addition to land space of 40.25 hectares. I return the project will yield
an enjoyment index of 36.5. adopting the project will entail constructing the golf holes in a
configuration displayed by the table below.
Kind of
golfing hole
Straight par
5
Dogleg par
5
Straight par
4
Dogleg par
4
Long par
3
Short par
3
Number of
holes 1 1 7 5 1 3
Conclusion and recommendation
When the three feasible options are ranked based on the construction cost; the standard
model is the most convenient followed by option 2 and then 3. This means in a situation where
the firm is concerned with saving the const of the project the standard model will be the ideal
option. The firm though is more concerned by the enjoyment index derived from each project
which makes the factor relevant in the decision-making process. The projects with the highest
enjoyment index are option 2 and 3 at 36.5 each. Being that the two models do yield similar
enjoyment index another feature is needed to gauge the best project. Looking at option 3 the firm
will need to raise an additional $ 800,000 to put it in place. The additional capital may take time
to raise and also means that the idea is too costly for the company’s present budget. It will thus
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be more efficient to adopt option 2. This option is cheaper to construct, gives the best enjoyment
index as well as meet the shareholders needs. I thereby recommend that the firm construct the
golf resort as modelled by option 2.
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