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Beau Ties Ltd Of Vermont Case Solution
| Solution Id | Length | Case Author | Case Publisher |
|---|---|---|---|
| 1543 | 552 Words (3 Pages) | Elliott N. Weiss, Stephen Shepherd | Darden School of Business : UV0337 |
A Word File
and
An Excel File
Bill Kenerson, the founder and president of Beau Ties Ltd of Vermont, is considering a structural change in the current production and shipping system of the company. His company has been operating in the niche market for the last three years based on an outsourced system for production and shipment of bow ties and accessories. He desires a more direct control over the operations and is also hopeful that such an action would result in cost savings. He has evaluated the capital requirement for a new facility to double its production volume in order to achieve the target revenue of $810,000 by the end of 1997. However, this case highlights the problem of him deciding whether to continue using his outsourced telephone ordering service with AIDC or purchase/rent a new one.
Following questions are answered in this case study solution
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Introduction
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Analysis
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Recommendation
Case Analysis for Beau Ties Ltd Of Vermont
2. Analysis
Using the data provided in the case and in supporting exhibits, a detailed analysis has been drawn up to assist Kenerson in making a decision regarding the two options. We have kept the analysis limited to the telephone ordering service by drawing up a comparison of weekly costs that Beau Ties Ltd would have to face in both cases. The excel file attached has all relevant calculations required to support it. The problem has been approached using the “Queuing Theory” method whereby a typical week from December 1995 has been used to calculate the AIDC cost and in-house cost. For each of the day, a relative has been calculated using the data given in Exhibit-6 ensuring that the day with the highest number of “calls received” for each day of the week is chosen. The process time “p” is given as 3, however, the wait time “Tq” and utilization “u” have been calculated using the following formulas:
A default number of operators has been used i.e. m = 1, to begin with, but, in several instances, during the week the number has gone up to 2. This has been done to ensure that utilization does not exceed 100% and also to ensure that the wait time Tq does not exceed 3 minutes as strictly suggested in the case. Furthermore, CVa and CVp have been used as 1 for simplicity purposes.
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