 | Management Information Systems 4/e - James A. O'Brien | |||||
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Chapter 14: Managing IT: Planning and Implementing Change
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1. Daylight Distributing Implements a Distributed System
Daylight Distributing Company is implementing a system whereby their salespersons will be issued portable computers. Salespersons will record sales and inventory information for each store as the call on that store is completed. Summary information about the day's sales will be transmitted every evening from the salespersons' PCs to Daylight's central database at headquarters using a modem and standard phone lines. Information about recent stockade and sales for stores that will be visited the following day will be downloaded to the salesperson's PC each evening as well. You have been asked to develop a sample database application to track this program. For each call the following information is to be recorded: the date the salesperson's name and the length of the call in minutes. Sample data are as follows:
Based upon the description above and the sample data:
2. Electronic Data Interchange at Daylight Distributing Daylight Distribution Company is investigating the costs and benefits of developing an electronic data interchange (EDI) system to connect it with its customers. Many of the larger department stores Daylight serves are already involved in EDI relationships with Daylight's competitors and some have threatened to quick stocking Daylight's products if they do not implement EDI. You have been asked to prepare a rough estimate of the costs and benefits of implementing an EDI system. You find that the cost of hardware and software to support an EDI system would be approximately $180 000 the first year with maintenance costs of $15 000 per year thereafter. Additional training and personnel costs in the IS department are estimated to be $50 000 the first year and $30 000 in each succeeding year. Benefits of the system will come from reduction in the clerical time required to process orders and from improved market share. The impact on market share is difficult to quantify so you decide to base the quantitative analysis only on the savings in clerical time. Daylight processes 45 000 orders per year. It is estimated that the use of EDI could save 30 minutes of processing time on each order. The average cost of clerical labor (including benefits) is $9.50 per hour. If Daylight implements EDI they expect to process 25 percent to their orders using the EDI system during the first year. They expect the percentage total orders processed by EDI to increase to 50 percent for the second year and then to increase by 5 percentage points in each succeeding year. Use this information to develop a spreadsheet comparing the costs and benefits of EDI over the first five years of operation. Based on your results would you recommend that Daylight Distributing proceed with the EDI project?
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