Clean Wash Laundromat

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  • Topic: Costs, 22nd century, Laundry
  • Pages : 8 (1681 words )
  • Download(s) : 653
  • Published : July 26, 2010
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I.BACKGROUND OF THE CASE

Ms. Giesel Reyes, the proprietor of Clean Wash Laundromat, reread the recently received fax from Hair cuts, a well-established chain of beauty parlors. Hair cuts is proposing a business deal with Ms. Reyes wherein Hair Cuts will avail of the wash, dry and fold service of Clean Wash Laundromat at 15% off the regular price. The service will cover a period of four months from June to September, which are peak months for Clean Wash Laundromat and will entail 60 kg per week or 240 kg per month of laundry.

Clean w\Wash Laundromat was established two years ago with an initial investment of P800, 000.00. Located near to prominent universities and several residential condominiums, Clean Wash caters mostly to students who live in dormitories and to residents of condominiums. It offers three basic services: wash, dry and fold; pressing and dry-cleaning. Except for dry-cleaning services, all services are done in-house. Dry cleaning is subcontracted to Dry Cleaning experts and is offered at a 15% mark-up.

Clean Wash Laundromat operates seven days a week from 7 a.m. to 9 p.m. It has 5 washing machines, 5 dryers and 3 flat irons. A washing machine and a dryer can handle a maximum of 15 loads of 3 kg laundry per day (1 load=3kg). Clean Wash offers next day pick-up service. Upon request of the customer, Clean Wash can arrange a same day pick-up or the customer can wait in the shop at no extra cost.

II.STATEMENT OF THE PROBLEM

Should Ms. Reyes accept the proposal of Hair Cuts?

III.ARES OF CONSIDERATION

a.Quantitative Factors

PRICE
Wash, Dry, FoldP35/kg

AVERAGE NUMBER OF LOADS PER MONTH (1 load=3kg)
January 1,960.00
February 1,820.00
March 1,680.00
April 1,680.00
May 1,540.00
June 2,080.00
July 2,160.00
August 2,170.00
September 2,150.00
October 1,960.00
November 2,100.00
December 1,960.00

ELECTRICITY BILLS (IN PESOS)
January 17,208.00
February 16,746.00
March 16,284.00
April 16,284.00
May 15,822.00
June 17,604.00
July 17,868.00
August 17,901.00
September 17,835.00
October 17,208.00
November 17,670.00
December 17,208.00

b.
c.
d.
e.
f.
g.

OTHER COSTS
RentP30,000 per month
SalaryP1,060 per day x 30 days
P31, 800 per month
Depreciation of machinesP4,166 per month
(Washing machine and dryer costs on average P50,000 each)
TelephoneP1,400 per month
Detergentaverage of P76.8 per load
Wateraverage of P0.50 per load
LPGaverage of P4.50 per load
Leasehold ImprovementsP100,000
SignageP30,000

b. Qualitative Factors
Reject/Decline
It may bring a bad reputation to Clean Wash for not accepting the business deal.

Accept
The supplier of detergent may give discounts to Clean Wash for an additional order of detergent. Additional workload for Clean Wash
The regular customers may know that Clean Wash gave 15% of the regular price to Hair Cuts.

IV. ALTERNATIVE COURSES OF ACTION

a. Reject/decline the proposal of Hair Cuts.
b. Accept the proposal of Hair Cuts.

V.ANALYSIS
Normal Capacity
Load 1 load=3kg
1 washing machine
Total load/day 15 15 x 3 = 45
Total load/month 15 x 30 = 450 45 x 30 = 1350
5 washing machine
Total load/day 15 x 5 = 75 45 x 5 = 225
Total load/month 450 x 5 = 2250 1350 x 5 = 6750

AVERAGE NUMBER OF LOADS PER MONTH (1 Load=3 Kg)
Load Normal Capacity Excess Capacity
January 1,960 2250 290 February 1,820 2250 430 March 1,680 2250...
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