Cru Computer Rental
Draw the Flowchart
1996 Customer Receiving Status 24 Status 40 Status 41 Status 42 Status 20 Parts Supplier
I
(unit) 8000 500 1500 1000 500 405 500 2000
R (unit/week) 1000 1000 700 405 405 405 405 1000
T (week) 8 0.5 2.14 2.47 1.23 1 1.23 2
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.
1996 Customer Receiving Status 24 Status 40 Status 41 Status 42 Status 20 Parts Supplier
I
(unit) 8000 500 1500 1000 500 405 500 2000
R (unit/week) 1000 1000 700 405 405 405 405 1000
T (week) 8 0.5 2.14 2.47 1.23 1 1.23 2
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.
Customer Receiving Status 24 Status 40 Status 41 Status 42 Status 20 Parts Supplier
I
(unit) 8000 500 1500 1000 500 405 500 2800
R (unit/week) 1400 1400 980 567 567 567 567 1400
T (week) 5.71 0.36 1.53 1.76 0.88 0.71 0.88 2
Utilization = (Inventoy
1996 Customer Receiving Status 24 Status 40 Status 41 Status 42 Status 20 Parts Supplier
I
(unit) 8000 500 1500 1000 500 405 500 2000
R (unit/week) 1000 1000 700 405 405 405 405 1000
T (week) 8 0.5 2.14 2.47 1.23 1 1.23 2
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.
1996 Customer Receiving Status 24 Status 40 Status 41 Status 42 Status 20 Parts Supplier
I
(unit) 8000 500 1500 1000 500 405 500 2000
R (unit/week) 1000 1000 700 405 405 405 405 1000
T (week) 8 0.5 2.14 2.47 1.23 1 1.23 2
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.
Customer Receiving Status 24 Status 40 Status 41 Status 42 Status 20 Parts Supplier
I
(unit) 8000 500 1500 1000 500 405 500 2800
R (unit/week) 1400 1400 980 567 567 567 567 1400
T (week) 5.71 0.36 1.53 1.76 0.88 0.71 0.88 2
Utilization = (Inventoy