what happened to beau case study answer key
Beau Ties Ltd. of Vermont Harvard Example Solution & Analysis
Telephone order servicing:
Kenerson is considering to bring telephone order processing in-house. He is considering this in society to reduce cost charged by the AIDC service providers i.e. $ 0.72 per minute. The fourth dimension taken to take to order is 6 min out of which 3 mins are hold fourth dimension. So, the extra iii min holding time is doubling the toll of service received by Kenerson.
The new service will consist of 4 lines and 12 stations and if 2 servers are introduced then the customer belongings volition reduce to 14.
Bringing the telephone service volition reduce significant cost to Kenerson:
Option 1:
To purchase the equipment for $ 33,000 and paying $ 281 per month.
Assay:
- Buying the new equipment will increment their assets in the rest sheet and will increase the value of the visitor.
- It will increase the maintenance toll to the Kenerson.
- They will have to pay stock-still amount of premium regardless of the telephone call made which might reduce the profitability in the catamenia of less calls made.
- It will as well increase the telephone operating toll of Kenerson.
- The purchase of new equipment volition make saving for kenerson of $ 51097.
- Kenerson can use the equipment for long term period which will be beneficial for Kenerson for long term period.
- Total saving made past considering option 1 volition exist $ 7,628 which is bottom than the saving made in choice 2.
- Kenerson can reduce the staffing toll past reducing the waiting / holding time. (See Appendix for staffing programme calculation)
Option ii:
To charter the equipment at a toll of $ 1270 per month.
Analysis:
- Leasing the equipment volition increase their operating cost and thus will reduce their profitability.
- Kenerson will non need to worry about the maintenance cost.
- No premium will demand to exist paid; the only payment of lease amount would be required.
- Kenerson will be able to make saving of $ 51097.
- Kenerson cannot use it for long term period and thus Kenerson will have to renew the charter.
- Total saving per annum past considering selection ii volition be $ 28,760 which is college as compare to option ane.
- The operator wages volition needed to be paid at the rate of $ 6 per hour, but this could be reduced if they can manage and minimize the belongings time per phone call (Meet Appendix for staffing plan calculation).
New Proposal for consolidated facility:
Option 1:
To buy new facility, which is 6000 sq feet.
Analysis:
- The Kenerson business is growing too quickly, it has found the increase in acquirement by 79% in 1995 and 41% in 1996. So, the new area will be helpful if they will need to increase production capacity in future.
- The buy of a identify will generate 4000 sq. feet of excess chapters useless, which volition show nether utilization of assets.
- Saving made from opting out the Vivian Sewing Shop will be $ 92,450 per annum.
- Other costs such every bit thread, renovation and auto purchase price will increase.
- Total cost to Kenerson of considering this option will be $ 304,300.
- They will need to control their inventory and maintain proper tape of it due to modify in fashion of ties.
- Kenerson will need to introduce the advisable no. of machines in order to reduce staff overtime toll.
- It might increase transportation cost also for the Kenerson.
Pick 2:
To acquire the property / site on rental basis.
Assay:
- Information technology will provide short term solution for Kenerson, if we consider the growth of the company.
- The rental site will increment the rental cost for Kenerson which will reduce the profitability of the company.
- The saving fabricated from Vivian Sewing Shop will be $ 92,450.
- The total saving by considering this option will be $ 58,700 (See Appendix)
- The Rental site volition be appropriate for the electric current production need i.east. 2000 sq. feet of place.
- The transportation cost will increase.
- They volition need to incur additional toll to handle and maintain the inventory.
- They will also need to maintain the record of inventory as well every bit the production process in order to identify the weakness and address them.
Staffing strategy:
Kenerson should consider The Staffing Strategy in gild to reduce the cost significantly as calculated in the appendix.....................
This is just a sample partial example solution. Please place the order on the website to society your own originally done case solution.
Bill Kenerson, the possessor-operator of retail bow tie business organisation is faced with two decisions. The first is to bring the product of bow ties in the firm. The second relates to their phone order entry organization. The example invites students to calculate the power production facility and decide the appropriate staffing for telephone operators.
This Darden study. "Hibernate
by Elliott North. Weiss, Steven Shepherd Source: Darden School of Business organisation 12 pages. Publication Date: December 4, 1996. Prod. #: UV0337-PDF-ENG
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