Cru Computer Rental

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Draw the Flowchart

1996CustomerReceivingStatus 24Status 40Status 41Status 42Status 20
PartsSupplier
I
(unit)8000500150010005004055002000
R (unit/week)100010007004054054054051000
T (week)80.52.142.471.2311.232

What was The Utilization Achieved by CRU in 1996?
Utilization = (Inventoy on Rent)/(Total inventory by CRU) =8,000/14,405= 55.54%

For 1996, Calculate The Average Time Spent by a Unit in Each Buffer.

1996CustomerReceivingStatus 24Status 40Status 41Status 42Status 20
PartsSupplier
I
(unit)8000500150010005004055002000
R (unit/week)100010007004054054054051000
T (week)80.52.142.471.2311.232

Calculate The Average Weekly Contribution Margin (Revenues - Variable Costs) to 
CRU in 1996. Ignore Labor and Facility Costs in This Calculation. We Assume That They Are Fixed. How Does the Contribution Margin Compare with The Weekly Depreciation? Weekly Revenue=Number of units on Rent × Rental Price=8,000 × $30 = $240,000

Weekly Variable Costs = Throughput × Cost=1,000 × $25 + 1,000 × $25 + 595 × $4 + 405 × $150 = $113,130

Weekly Contribution Margin = $240,000-$113,130=$126,870

Weekly Depreciation=(Total Inventory(unit) × Purchase Price)/(Time (week) )=(14405 × $1000)/(36/12*52)=$92,339.74

What do you think about the decision to launch a sales drive in 1997? If you had a chance to advise Richard, what actions would you suggest Richard focus on to improve performance at CRU (give a concrete plan listing the resulting benefits)? What are key performance measures that he should focus on? Situation 1: Demand increases to 1400 units/week and the buffer size remains the same.

CustomerReceivingStatus 24Status 40Status 41Status 42Status 20
PartsSupplier
I
(unit)8000500150010005004055002800
R (unit/week)140014009805675675675671400
T (week)5.710.361.531.760.880.710.882

Utilization = (Inventoy on Rent)/(Total inventory by CRU) =8,000/15,205= 52.61%

Weekly Revenue=Number of units on Rent × Rental Price=800 ×6× $30+400×8×$35 = $256,000

Weekly Variable Costs = Throughput × Cost=1,400 × $25 + 1,400 × $25 + 980×0.85 × $4 + 567 × $150 = $158,382

Weekly Contribution Margin = $256,000-$158,382=$97,618

Weekly Depreciation=(Total Inventory(unit) × Purchase Price)/(Time (week) )=(15,205 × $1000)/(36/12*52)=$97,467.95

Weekly Profit=Weekly Contribution Margin-Weekly Depreciation=$97,618-$97,467.95=$150.05

Situation 2: Demand increases to 1400 units/week and the flow time remains the same.

CustomerReceivingStatus 24Status 40Status 41Status 42Status 20
PartsSupplier
I
(unit)8000700209714006975676972800
R (unit/week)140014009805675675675671400
T (week)5.710.52.142.471.2311.232

Utilization = (Inventoy on Rent)/(Total inventory by CRU) =8,000/16,958= 47.18%

Weekly Revenue=Number of units on Rent × Rental Price=800 ×6× $30+400×8×$35 = $256,000

Weekly Variable Costs = Throughput × Cost=1,400 × $25 + 1,400 × $25 + 980×0.85 × $4 + 567 × $150 = $158,382

Weekly Contribution Margin = $256,000-$158,382=$97,618

Weekly Depreciation=(Total Inventory(unit) × Purchase Price)/(Time (week) )=(16,958 × $1000)/(36/12*52)=$108,705.13

Weekly Profit=Weekly Contribution Margin-Weekly Depreciation=$97,618-$108,705.13=-11,087.13(Loss)

Situation 3: Demand is 600 units/week and the flow time remains the same.

CustomerReceivingStatus 24Status 40Status 41Status 42Status 20
PartsSupplier
I
(unit)48003008996002992432991200
R (unit/week)600600420243243243243600
T (week)80.52.142.471.2311.232

Utilization = (Inventoy on Rent)/(Total inventory by CRU) =4,800/8,640= 55.56%

Weekly Revenue=Number of units on Rent × Rental Price=800 ×6×$30= $144,000

Weekly Variable Costs = Throughput × Cost=600 × $25 + 600 × $25 +...
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