Equipment Selection RFID vs. UPCEquipment differencesSlide 3Slide 4Slide 5How do we profit?Slide 7Basic AssumptionsCosts of EquipmentSlide 10Basic AnalysisSensitivity AnalysisConclusionEquipment SelectionRFID vs. UPCEGR 403 August 22, 2005Team 3Saul Barbosa – Equipment ResearchRoss Nichols – OrganizerChih-Yun Sun – Cost AnalysisGreg Temple – SummarizerEquipment differences-Parallel Bars Store Binary Code-Universal Product Code-UPC Labels•UPC BarcodeEquipment differences-Requires Manual Input-Machine Readable-Provide Information•UPC LabelsProduct FingerprintHelp Inventory TrackingIdentify Who Is Buying ProductsEquipment differences-RFID Tags-Radio Frequency Identification•RFIDIntelligent Bar CodesSmart LabelsEquipment differences-Communicate To A Network-Automated Input-Track Products Continuously•RFID TagsLocal & RegionalIncoming & OutgoingHow do we profit?•Time Savings–Product Promotion/Location–Manpower–Universal Application•Reduce Shrinkage–Stronger theft deterrentProduct Promotion/Location•Increase of Sales–Promotional displays–Active selling locations–Promotional displays and there impact on salesBasic Assumptions•Blockbuster Corporation•1.4 Billion in annual sales–7265 Stores–2 Systems per store–$194,000 annual profit per store–75% profit from register productsCosts of Equipment•UPC–$22,000 per system–$10,000 magnetic security system•Other Costs–$18,000 Maintenance a year–$1,500 a year for labels•Annual Costs–$207,725 –Includes Staff of 8 & 15% ShrinkageCosts of Equipment•RFID–$55,000 per system•Other Costs–$18,000 Maintenance a year–$15,000 a year for labels•Annual Costs–$157,800–Including staff of 6 and 5% ShrinkageBasic Analysis •Based on Present Cost analysis with 10% interest for 5 years.•NPC of UPC is $851,441•NPC of RFID is $708,186•Assume fixed output (profit)•Lower net present cost will be more preferred; therefore, RFID is the better option in this analysisSensitivity Analysis•Set NPC of UPC is $851,000•Cost of RFID increases 50%–NPC of RFID is $763,000 (chose)•If RFID doesn’t improve sales or reduce shrinkage–NPC of RFID is $791,000 (chose) •If RFID doesn’t cut down man power–NPC of RFID is $866,000 (not chose)–If the period extend to 9 years, RFID will be preferred.Conclusion•RFID–Improve Efficiency–Save Time–Reduce Staff Size–Expand Marketing–Increase
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