Northern airlines merged with southwest airlines

Assignment Help Operation Management

Reference no: EM132153628

In chapter 4 there is a case study question Im looking for a step by step to do a question similiar with different number

In January 2012, Northern Airlines merged with Southwest Airlines to create the fourth largest U.S. carrier. The new North-South Airline inherited both and aging fleet 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.

Stephen's first concern in creating a financially solid company was maintenance costs. It was commonly surmised in the airline industry that maintenance costs rise with the age of the aircraft. He quickly noticed that historically there had been a significant difference in the report B727-300 maintenance costs in both the airframe and engine areas between Northern Airlines and Southeast Airlines, with Southeast having the newer fleet.

On February 12, 2012, Peg Jones, Vice President for operations and maintenance, was called into Stephen's office and asked to study the issue. Specifically, Stephen wanted to know whether the average fleet age was correlated to direct airframe maintenance costs and whether there was a relationship between average fleet age and direct engine maintenance costs. Peg was to report back by February 26 with the answer, along with quantitative and graphical descriptions of the relationship.

Peg's first step was to have her staff construct the average age of Northern and Southeast B727-300 fleets by quarter, since the introduction of that aircraft to service by each airline in late 1993 and early 1994. The average age of each fleet was calculated by first multiplying the total number of calendar days each aircraft had been in service at the pertinent point in time by the average daily 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 fleet.

The average utilization was found by taking the actual total fleet hours flown on September 30, 2011, from 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 at the end of the first quarter, average fleet data 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 paired with fleet average age in that table.

Discussion Question

1. Prepare Peg Jones's response to Stephen Ruth

Reference no: EM132153628

Questions Cloud

Should design product in-house or outsource the design : A company is deciding if it should design a product in-house or outsource the design. should the company outsource design or do it in-house?

Used equipment rather than new equipment : "Under what conditions might a company prefer to invest in used equipment rather than new equipment?"

Explain each of the three components of haddon matrix : Explain each of the three components of Haddon’s Matrix. List at three measures that could be used to decrease road traffic injuries.

Striving for growth in weakening global agricultural sector : Deere & company in 2015: striving for growth in a weakening global agricultural sector.

Northern airlines merged with southwest airlines : Northern Airlines merged with Southwest Airlines to create the fourth largest U.S. carrier. Prepare Peg Jones's response to Stephen Ruth

Using what you learned about the psychology of pricing : Using what you learned about the psychology of pricing, explain if Bruce is getting a good deal or not.

How many roses should maile purchase : Maile’s Flower Shop gets a rose delivery once per week for which they pay 67 cents per rose. How many roses should Maile purchase?

What is the purpose of financial ratio analysis : What is the purpose of a financial ratio analysis?

Database software to manage the flow of information : Many health care organizations and other businesses use database software to manage the flow of information and make important decisions.

User Account

All Pages