In group of 5, you are required to tackle the following case study:
Ocean Limited is a UK company specialised in commercial corporate dressing (trendy uniforms) for employees in sales, presentation, reception, fairs etc. They have 50 employees and are operating 100% in the domestic market. The company designs the clothes but have the finished items imported from its affiliate in a low-waged country. At this moment the company takes the body-measurements of clients by hand measuring, 5 persons per hour with 2 employees.
The General Director of Ocean Ltd. has been in contact with a company that develops hi-tech body-scan machines and was offered a new invention based on ultra-sonic sensor technology. The new body-scan machine has the following features:
• Mobility.
• 60 persons per hour throughput.
• Persons to be scanned can still wear trousers and shirts.
• Handling of the body-scan by one operator.
• The time of implementation is estimated at 6 months.
• Total costs involved will be approximately £ 150,000.
Other relevant information:
• Man-hour cost: operator £ 60 per hour, other employees £ 40 per hour each.
• Average total cost of one outfit will be £ 400 with a gross profit margin of 40% of sales value.
• Sales are 2,000 outfits per month now, and are expected to grow to 5,000 outfits per month next year due to the implementation of this project.
Requirements
1. Present the organisation of the project management team and use relevant tools to demonstrate the project planning. (P14)
2. Review management information systems and suggest appropriate information processing tools for the operational, tactical, and strategic levels of an organisation. (P11)
3. Identify which information system your team is operating in and validate your answer. (M3)
4. Collect secondary economic data from media such as newspapers, magazines, TV, journals, etc., for the purpose of sales forecast. (P1)
5. Describe the process of such secondary data collection. (P2)
6. Justify your methodology in terms of: sources, relevancy, appropriateness, reliability. (P3)
7. Ocean Ltd.’s intelligence has collected information about the return on investment of one competitor who adopted a similar machine (but much less advanced than the machine of our interest) 2 years ago, as follows:
Month ROI (%) Month ROI (%)
1 2.36 13 3.46
2 5.73 14 2.64
3 6.6 15 3.63
4 10.05 16 3.44
5 5.13 17 9.49
6 1.88 18 4.9
7 2.52 19 7.45
8 2 20 20.23
9 4.69 21 3.91
10 1.91 22 1.7
11 6.75 23 16.29
12 3.92 24 5.52
25 1.44
Calculate representative values: Mean, Median, Mode, Quartile; and draw conclusions about the distribution of the sample. (P4)
8. Calculate the variance and standard deviation; and draw some statistical conclusions about the dispersion of this data sample. (P5)
9. Use histogram to illustrate your findings. (P7)
10. Have any of your findings in requirement 8 got any implications that might be useful for our project evaluation. (D3)
11. Based on the numerical data provided and the secondary data collected, make sales forecast for the coming 5 years and present it graphically. (P8)
12. Forecast the relation between the sales and marketing expenditure for the coming 5 years with sound validation, and use the appropriate technique to present it pictorially. (M2)
13. Calculate the correlation between sales and marketing expenditure based on your forecast in requirement 12. (P6)
14. Prepare a forecasted profit & lost account for the next 5 years, taking into account all potential operating costs; make relevant assumptions where necessary and justify them. (D2)
15. Assuming that the Net Profits from your forecast in requirement 14 are streams of cash-flow generated by this project and the machine’s life spans 5 years with no residual value; evaluate the viability of this project by using a variety of financial tools (assuming required rate of return to be 8% per annum). (P15)
16. Compare the results generated by the financial tools in requirement 15, select the one that you think is most applicable for the valuation of this project and defend your choice. (M1)
17. Review and evaluate inventory control systems in an organisation. (P12)
18. Prepare a spreadsheet to enable material planning for the manufacturing affiliate and calculate economic order quantities given the following information (P13):
• Each outfit requires 2 units of raw material
• Ordering cost and set-up cost: £ 5,000 per month
• Cost of holding each unit: £ 0.30 per month
19. Evaluate the project in sense of merits and limitations. (D1)
20. Prepare a formal business report including all the work that you have done. (P10)
21. Present this project orally to the General Director of the company (the lecturer) to persuade him to invest in this project or to recommend him against this project. (P9)