CRU Computer Rentals Case Study

Prevents loss of time and delays in order to clear up mess before using equipment.

If the operation have not reordered all the goods they need, this can lead to irritated customers and lower revenue for the operation.

So now the issue left that if the company cannot avoid small shipments then how to minimize the cost associated to the shipment of such small shipments. As of now the company is using a freight forwarder which consolidates small shipments to fill 20-feet or 40-feet containers.

From the first page of the case we have an estimate of $11 million cost of lost sales and backorders and $10 million associated with having too much of the wrong inventory. These costs are stated as being a conservative estimate.

1.2. Earned its first profit in 1981- $39.2m on revenues of $4.2bn. Privatised through an IPO in 1987

Another business requirement is the timely delivery of quality modules and equipment by the suppliers. The main task of the project team is to install the modules and equipment on the trains. It is therefore essential that the products are procured in good time. It is the task of ECO-Trans to ensure that quality equipment is delivered in time for the completion of the project. The delivered components should be inspected for quality at the time of delivery to ensure they match the client’s quality needs and recommendations (Burke, 2013). Any defective components should be noted and returned to the supplier. This would help

3. The new system allows charging additional services required by the clients, generating more revenue. 4. Knowing which are the cost drivers , it will be possible to control costs more effectively (reducing fixed costs and increasing net margin) 5. Market analysis with direct competitor in the region suggests that studio prices are at least 21% lower and one bedroom suite prices are at least 40% lower than the competition in the new pricing model. Comparison with the general market suggests similar findings. MAIN REPORT

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.

Because the product was leaving the warehouse and getting to stores quicker, I was able to reduce the storage space which was an initial problem so the increase of costs because of it decreased. The stores showed a moderate increase in profit.

Now that the initial startup phase of our company is complete, our team of Analysts has determined what we have deemed reasonable costs, considering that our definition of “reasonable” aligns with yours. In order to defend our stance on what we feel is reasonable, we have considered the nature of costs, such as air travel for business meetings and the use of our high quality materials, by researching the market for affordable, high-quality materials and have put standards in place to keep air travel valid for these government contracts. With the understanding that although the nature of the cost may be considered acceptable, the amount of the cost may not meet standards when it comes to costs defined as “reasonable” (Murphy, John Edward; Guide to Contract Pricing, pg. 47). With this in mind, we continue to research the market to find adequate material at a much lower cost. We have used this data to create what we feel is a cost that would not and should not exceed what any prudent person would pay in a competitive business environment. We are aware of the competition and have made it a strong incentive of ours to save on costs for the items that we are providing to you. Allowability of our costs is guided by the 52 generally applicable cost principles that are based on specific laws and policies (Murphy, John Edward; Guide to Contract

| Time spent in all buffers is the same as it was in last year

* Understanding the limits of product sampling and inspection methods, especially for a product that is destroyed by the inspection process itself

And the maximum payoff (as per [3] above) for serving 50 customers will be (150 – 100) x 50= $2500.

a. Increasing the price to commercial customers to $1,000 per hour would reduce demand by 30 %.

reduction in finished goods inventories, the costs charged to the sales of the period must be less or