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GROUP WORK #1 NORTH-SOUTH AIRLINE

QUANT-T TH302

GROUP 4 Members:

Cuevas, Clio Margaret

Paguntalan, Cher Hope

Villajuan, Marimar

Inigo, Alexis

Leader:

Tan, Alaster

October 24, 2013 6:00 pm

I. Objectives and Scope a. General Objectives i. To answer all of the questions indicated in the case study. ii. To let the students think critically of which method or approach to use for every problem. b. Specific Objectives i. To answer the discussion question indicated in the case study. ii. To calculate and use the utilities we have in order to get the calculations. iii. To come up with the best response Jones can give to Ruth. c. Scope of the Project i. It is a general activity that is assigned to be done within one week. The Microsoft Word software is utilized. d. Assumptions and Justification i. This case study is needed for students to practice the calculations taught and to understand the theorems connected per problem. This is a good way for students to understand the lesson fully and to incorporate the understanding they received according to every case study. II. Methods/Approach a. Regression Analysis - First of all, we checked the correlation between the average ages of the fleet and the maintenance cost for both airlines separately. Correlation is the measure of the degree of relation of variables. b. Excel QM - Mostly, we used the Excel QM to get the following data in the tables and the graphs. c. Social Networking Sites - The group utilized social networking sites such as Facebook, Google Drive and Twitter to communicate each others contributions and opinions about the said activity. The communication took place over the weekend before the presentation. III. Analyses and Discussions Base on the case study, we need to formulate the response that Peg Jones will give Stephen Ruth about the assigned task to him. The following should be answered with quantitative and graphical descriptions: 1. Whether the average fleet age was correlated to direct airframe maintenance costs 2. Whether there was a relationship between average fleet age and direct engine maintenance costs. Prepare Pegs response to Stephen Ruth: Northern Airline - Airframe Maintenance Cost: Cost = 36.097 (intercept) + 0.0026 (slope) x Airframe age r-squared = 0.769 Coefficient of relation = 0.877

Table 1 Northern Airline Airframe Cost per Aircraft in correlation with Average Age (Hours)

Graph 1 Northern Airline Airframe Cost per Aircraft in correlation with Average Age (Hours)

Northern Airline -- Engine maintenance cost: Cost = 20.571 + 0.0026 x Airframe age. r2 = 0.612 Coefficient of correlation = 0.783.

Table 2 Northern Airline Engine Cost per Aircraft in correlation with Average Age (Hours)

Graph 2 Northern Airline Engine Cost per Aircraft in correlation with Average Age (Hours)

Southeast Airline -- Airframe maintenance cost: Cost = 4.597 + 0.0032 x Airframe age r2 = 0.390 Coefficient of correlation = 0.625

Table 3 Southern Airline Airframe Cost per Aircraft in correlation with Average Age (Hours)

Graph 3 Southern Airline Airframe Cost per Aircraft in correlation with Average Age (Hours)

Southeast Airline -- Engine maintenance cost: Cost = 0.671 + 0.0041 x Airframe age. r2 = 0.460 Coefficient of correlation = 0.678

Table 4 Southern Airline Engine Cost per Aircraft in correlation with Average Age (Hours)

Graph 4 Southern Airline Engine Cost per Aircraft in correlation with Average Age (Hours)

IV. Findings and Conclusions The airlines should be looked in separate views because it was only joined/combined recently so their past cost and usage are different. Looking at the table given in the case study, it was quite easy to compare the average age (hours) to the airframe cost per aircraft and engine cost per aircraft. Northern Airline - There is a limited correlations between maintenance costs and airframe age for Northern Airline. - Airframe age is not the only important factor Southeast Airline - The relationships between maintenance costs and airframe age for Southeast Airline are much less well defined. - Airframe age is not even the most important factor Overall, it would seem that: The Northern Airline seems to have the smallest variance in maintenance costs, which means that the everyday management of maintenance is working very well. Maintenance costs is the function of airline than the airframe age. The airframe and engine maintenance costs of Southeast Airline are not only lower but also nearly similar than those for Northern Airline, but from the graphs at least, appear to be rising slightly more sharply with age. It shows that Southeast Airline may perform more efficiently during emergency repairs, and Northern Airline may place more emphasis on preventive maintenance.

Peg Joness response to Stephen Ruth should be: There is evidence to suggest that maintenance costs could be made to be a function of airframe age by implementing more effective management practices. The difference between the two maintenance procedures of the airlines should be investigated.

V. Recommendations a. Given this type of case studies, the group has agreed that this is a good way to help students learn more and be able to apply what they are studying. b. The solutions that we arrived at are based from the examples and the lessons taught by the professor. c. In order to achieve the desired results, read the case study again and do it step by step.

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