Cru Computer Rentals

In: Business and Management

Submitted By ashwins82
Words 1630
Pages 7
CRU Computer Rentals
(Operational Management Assignment)

Executive Summary
CRU is one of the two national computer rental companies. They purchase CPU, monitor, printer and other peripherals and rent them out for long term leases and short term rentals. The case covers the problem faced by the company in 1997 when the rental market started to decline and the efforts by the company to bring up the sales plunged the company to losses.
Problem Statement
In 1996, they had a revenue of 15 million$ and the average number of units that were on rent was at 1000 units per week.
But at the beginning of 1997, the rental market began to decline and the demand fell down to 600units per week at CRU. This was a matter of grave concern to CRU and they desperately thought of ways to bring up the utilization rate. To get around the issue, they started offering some customer incentives and also started offering bonus payments to the sales staff for new demand generated. As a result of this, the sales went up to 1400 per week with 600 of them going for 8 weeks and the remaining for 4 weeks. The average time per buffer was kept the same as that of 1996. As a result of this effort, the revenues and utilization rates went up. But contrary to the expectations of the CEO who considered utilization rate as a good figure of performance of the company, the net profit went negative. The problems here are as listed below. 1) What went wrong with the decision to launch the sales drive? What other way would have bettered the situation for the CRU rental company? What performance parameters other than utilization rate should have been used to rightly judge the performance of the company? 2) Analyze on the various alternatives suggested by the VP of sales. The alternatives involve attempts to keep the buffer size as the same and also keep the flow time as same.

Alternatives…...

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