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Cru Computer Case Essay

1750 words - 7 pages

CRU COMPUTER RENTALS CASE

CRU Computer Rentals Flow Chart
Customer

Receiving

Repairs

Pre-Config

Repairs

Status 24
Status 41
Config

30%
70%
15%

Ship

Status 32
Ship

CRU situation last year:
TABLE 1: process flow data | | | | | | | | |
| | | | | | | | | |
  | Customer | Receiving | Status 24 | Status 40 | Stored orders | Suppliers | Status 41 | Status 42 | Status 20 |
  | (rented units) | (received units) |   |   |   |   |   |   |   |
  |   |   |   |   |   |   |   |   |   |
Thoughput | 1,000 | 1,000 | 700 | 405 | 405 | 405 | 405 | 405 | 1,000 |
(units/week) |   |   |   |   |   |   |   |   |   |
  |   |   |   |   |   |   ...view middle of the document...

CRU situation this year:
1. Case 1: Demand increases to 1,400 units due to sales drive policy, and average time flow remains the same
TABLE 2: New flow data | | | | | | | | |
| | | | | | | | | |
  | Customer | Receiving | Status 24 | Status 40 | Stored orders | Suppliers | Status 41 | Status 42 | Status 20 |
  | (rented units) | (received units) |   |   |   |   |   |   |   |
  |   |   |   |   |   |   |   |   |   |
Thoughput | 1,400 | 1,400 | 980 | 567 | 567 | 567 | 567 | 567 | 1,400 |
(units/week) |   |   |   |   |   |   |   |   |   |
  |   |   |   |   |   |   |   |   |   |
Inventory | 8,000 | 700 | 2,097 | 1,400 | 697 | 567 | 1,264 | 697 | 2,800 |
(units) |   |   |   |   |   |   |   |   |   |
  |   |   |   |   |   |   |   |   |   |
Flow time | 5.71 | 0.50 | 2.14 | 2.47 | 1.23 | 1.00 | 2.23 | 1.23 | 2.00 |
(weeks) |   |   |   |   |   |   |   |   |   |
| Number in black are given and number in red are calculated using Little's Law | | | |
| | | | | | | | | |
* Number of units on rent = 8,000
* Total number of units owned (total inventory this year) = 16,958
* Utilization = 8,000/16,967 = 47.15%
* Revenue per week = 600 x 8 x $30 + 800 x 4 x $35 = $256,000
* Variable cost per week = $25 x 1,400 + $25 x 1,400 + $4 x 980 x 0.85 + $150 x 567 = $158,382
* Contribution margin per week = $256,000 - $158,382 = $97,618
* Depreciation per week = 16,958 x ($1,000/(3 x 52)) = $108,705
* The depreciation is higher than the variable cost by $11,087 ($108,705 – $97,618). The company loss is about $11,087 per week

2. Case 2: No sales drive policy, same flow time, and demand at 600 units per week
TABLE 3: New flow data | | | | | | | | |
| | | | | | | | | |
  | Customer | Receiving | Status 24 | Status 40 | Stored orders | Suppliers | Status 41 | Status 42 | Status 20 |
  | (rented units) | (received units) |   |   |   |   |   |   |   |
  |   |   |   |   |   |   |   |   |   |
Thoughput | 600 | 600 | 420 | 243 | 243 | 243 | 243 | 243 | 600 |
(units/week) |   |   |   |   |   |   |   |   |   |
  |   |   |   |   |   |   |   |   |   |
Inventory | 4,800 | 300 | 899 | 600 | 299 | 243 | 542 | 299 | 1,200 |
(units) |   |   |   |   |   |   |   |   |   |
  |   |   |   |   |   |   |   |   |   |
Flow time | 8.00 | 0.50 | 2.14 | 2.47 | 1.23 | 1.00 | 2.23 | 1.23 | 2.00 |
(weeks) |   |   |   |   |   |   |   |   |   |
| Number in black are given and number in red are calculated using Little's Law | | | |

* Number of units on rent = 4,800
* Total number of units owned (total inventory this year) = 8,640
* Utilization = 8,000/16,967 = 55.55%
* Revenue per week = 600 x 8 x $30 = $144,000
* Variable cost per week = $25 x 600 + $25 x 600 + $4 x 420 x 0.85 + $150 x 243 = $67,878
* Contribution margin per week = $144,000 - $67,878 = $76,122
* Depreciation per week = 8,640 x ($1,000/(3 x 52)) =...

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