Project #77803 - Operation Management class

Turkey Tracking System Case

Jake Thomas has a business opportunity to manufacture the “brains” of a turkey tracking system.  A major hunting and fishing outfitter has designed a system to track turkeys using video, sound, and infrared technology. Think of it as a fish finder for turkeys.  The system would allow the hunter to place sensors on up to 250 acres of land, and allow the hunter to accurately locate the turkeys on handheld systems.  There are even talks of integrating the system with smart phones and other handheld devices with GPS.  The hunting and fishing outfitter has all the sensor technology outsourced and wants Jake Thomas to provide the “brains” of the system.

The “brain” would consist of a computer or chipset that will analyze all the sensor data and create the location of the turkey.  The “brains” would also have to be able to distinguish and locate multiple turkeys.  Most of the programming for the “brain” has been completed.  All Mr. Thomas would have to do is purchase the hardware, configure it to the hardware, and make sure it was durable enough to survive extreme hunting conditions.  This is to be a high end system for the most avid turkey hunters.

Mr. Thomas has decided to use the Raspberry Pi as the basis of the “brain.” The website for the Raspberry Pi is http://www.raspberrypi.org/.  Mr. Thomas can purchase the Raspberry Pi for $35 per unit.  The following is a list of the hardware required to create the “brain” of the system:

 

 

 

 

 

Mr. Thomas has located a building that will meet the needs for production from the local industrial park.  The building can be used as is and is in a gated secure location.  Instead of purchasing some equipment Mr. Thomas has decided to rent as much of it as possible.  The demand for the turkey tracking system is not definite and he wants to have as little sunk costs as possible.  Some equipment cannot be rented and has to be purchased.  Mr. Thomas wants to distribute these costs across the first year.  Mr. Thomas wants to install a video surveillance and monitoring system in case of fire, theft, and other damage.

 

 

 

 

Mr. Thomas will be the CEO, head engineer, lead programmer, quality manager, head of human resources, lead sales person, and any other title that has to be addressed.  To start off with, Mr. Thomas needs a total compensation of $260,000 per year.  He will hire an office administrator to coordinate his schedule, answer the phone, billing, accounts receivable, and other duties as needed.  The total compensation for this position is $80,000 per year. Total compensation includes health insurance, Medicare Tax, FICA, and retirement.  These salaries will be paid the first year regardless of sales.

The rest of the labor will be provided by local college students.  The hours will be limited to 25 hours or less to prevent the company from having to pay fulltime benefits.  It will also allow the company to operate below the minimum threshold of providing healthcare as required by the Patient Protection and Affordable Care Act.  The employees will be paid $16 per hour in total compensation. The labor rate will cover the required taxes, Medicare Tax, and FICA.  

An employee can build 2 units per hour.  The students like the flexible schedules. The number of hours and employees can be added and subtracted as needed.  The training needed to train employees is minimal.  The college courses usually provide enough instruction to make them profitable employees.  Assume 4 weeks per month. The company will shut down the other 4 weeks per year.

The major hunting and fishing outfitter wants to sell the complete unit for $499.95. Their profit margin for product of this nature is 33 percent.  The outfitter will allow for 55 percent of the costs of the entire system to be allocated for the “brains” of the system.

As a small business analyst, your task is to determine at what demand per month the company will break even.    Also, analyze how many units will be needed to produce profits of $5,000, $10,000, $20,000, and $30,000 per month.  Mr. Thomas is also interested in the amount of hourly workers that would be needed to accomplish the above goals. This will help determine if he will likely out produce his labor supply.

If the major hunting and fishing outfitter decides that $499.95 is too high and wants to drop the price $399.95, but takes a 30 percent profit margin. What does this do to the breakeven price?

 

For this case, submit a typed word document that accurately presents your findings. Think of this word document as a formal proposal of your findings. It needs to use proper language, punctuation, and look professional.  (Like something you would turn into Dr. Plumlee in Professional Communications Strategies) You need to include the how and why you derived your findings. Submit the Word document in the Turnitin link.  If you use Excel to solve your case, include copies of your tables in the report, explain in detail the formulas you used, and submit a copy of Excel file to this link.  Report goes in the Turnitin link, supporting files in this link.

 

Subject Business
Due By (Pacific Time) 8/1/2015
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