The CRU Computer Rentals case study discusses CRU, a company that rents and leases computers. This case study aims to show the flow of business factors such as inventory, throughput, flow time, and financial factors in the operation of a company. By looking at such factors, students will understand how a company's revenue flows.
Sunil Chopra
Harvard Business Review (KEL017-PDF-ENG)
January 01, 2002
Case questions answered:
- Draw a flowchart of CRU Computer Rentals operations.
- What was the utilization achieved by CRU last year?
- Calculate the average time spent by a unit in each buffer last year.
- Calculate the average weekly profit of CRU last year. Ignore labor and facility costs in this calculation; we assume that they are fixed. How does the contribution margin compare with the weekly depreciation?
- What do you think about the decision to launch a sales drive this year? If you had a chance to advise Sarkis, what actions would you suggest Sarkis focus on to improve performance at CRU? (Give a concrete plan listing the resulting benefits.) What are the key performance measures that he should focus on?
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CRU Computer Rentals Case Answers
This case solution includes an Excel file with calculations.
Case Summary – CRU Computer Rentals
CRU Computer Rentals is a computer rental company with 2 megastores and 23 local retail centers. They have 3 types of clients – Large corporations, Small businesses, and trade shows. They had an average rental rate of 1000 per week. The process ran through multiple departments like Order receiving, QA, Picking, Configuration, Shipping, receiving, reconfiguration, and repairs. CRU measured its performance based on utilization.
Utilization = Inventory on Rent / Total Inventory Owned by CRU
Lately, they have been having a severe dip in the utilization level and had to run incentives and special prices to shoot up the utilization rate. But even with a higher utilization rate, it was observed that their profits went down instead of going up.
Draw a flowchart of CRU Computer Rentals’ operations
What was the utilization achieved by CRU last year?
- Utilization = No. of units on rent / No. of units owned by CRU Computer Rentals = Inventory on rent/ Total inventory
- No. of units on rent = No. of units rented per week* No of weeks = 1000*8 = 8000
- Total Inventory = Sum of no. of inventory units in the buffers(Customer, Receiving, Status 24, Status 40, Status 41, Status 42, Status 20) =
- 8000+500+1500+1000+500+500+2000+405 = 14405
- Therefore, Utilization = 8000/14000 = 0.55 or 55.00 %
Calculate the average time spent by a unit in each buffer last year.
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