Cru Computer Rental

Assignment 1: CRU Computer rental

1.

Draw a flowchart of CRU’s operations.

2. What was the utilization achieved by CRU last year?

  | Customer | Receiving | Status 24 | Status 40 | Status 41 | Status 42 | Status 20 | Parts |

Throughput (Units / Week) | 1000 | 1000 | 700 | 405 | 405 | 405 | 1000 | 405 |

Inventory distribution(Week) | 8000 | 500 | 1500 | 1000 | 905 | 500 | 2000 | 500 |

Flow time (Week) | 8 | 0.5 | 2.1428 | 2.469136 | 2.234568 | 1.234568 | 2 |   |

Little’s Law: Inventory = Throughput rate * Flow time

Total Inventory = 14405 Units

Inventory on Rent = 8000 Units

Utilization = Inventory on Rent / Total Inventory owned by CRU

= 8000 / 14405 = 0.55536 or 56%

3. Calculate the average time spent by a unit in each buffer last year?

  | Customer | Receiving | Status 24 | Status 40 | Status 41 | Status 42 | Status 20 |

Flow time (Week) | 8 | 0.5 | 2.521008 | 2.469136 | 2.234568 | 1.234568 | 2 |

4. Calculate the average weekly profit (revenue-Variable costs- depreciation) to CRU last year. Ignore labor and facility costs in this calculation; we assume that they are fixed. How does the contribution margin compare with the weekly depreciation?

Average weekly revenue per unit for rentals = 30$

Inventory on rent = 8000

Shipping Cost per unit=25 $

Returning Shipping Cost per unit= 25$

Convert Unit from Status 24 to Status 20 = 4$

Parts Cost when repairing defective unit = 150$

Total Inventory = 14405 Units

a. Revenue = 30 * 8000 = 240,000 $

b. Variable Cost = 1000*25 +1000*25 +595* 4 + 405 * 150 = 113,130 $

c. Depreciation = 14405 * (1000/156 )= 92340 $

d. Weekly profit = 240000-113130-92340 = 34530 $

5. What do you think the decision to launch a sales drive this year? If you had a chance to advice Sarkis, what action would you suggest Sarkis focus on to improve performance at CRU? (Give a concrete plan...