Portland Computer System Analysis

Portland Computer Systems Assignment

Group Members: Serena Lin, Ben Hwang, Akshar Patel, Rosemary Fuller, Beatrice Hagney

Portland Computer Systems (PCS) is seeing declines in profitability despite sales because they have too much inventory on hand, their return software takes too long to process due to inefficient operations, they focus on less profitable leases, and their shipping costs are too high. Exhibit 1 shows the flow chart for the process at PCS, making evident the highly complex and inefficient operations of the company.

1. Focus on 8 week leases because it nets higher profit. The 50 dollar shipping cost greatly reduces the profit. Procuring more eight-week leases will increase PCS’s profitability. Analysis shows that four-week leases are less profitable because equipment must be shipped and processed more frequently, increasing the costs for PCS (see exhibit 5).
2. Rental prep inspect every piece of equipment before it goes into storage, bypassing the OLP division
3. Reduce required amount of CAT-O inventory to one-week’s demand. an equipment spends, on average, 41 days in the OLP (see exhibit 3 for calculation). Currently, having equipment sit idle for a week costs us $44,870/week (see exhibit 4 for calculation).  
4. Reduce the time it takes to repair the equipment by keeping parts in inventory. It will reduce idle time of Cat-DR by a week.
5. Ideally want 100% utilization so no idle time (see exhibit 2 for time spent in each label). The utilization metric isn’t the best method. It is what led to the increase in inventory.

Exhibit 1: PCS Process Flow Chart

[pic 1]

Exhibit 2: Total inventory and average time spent in different categories

Throughput rate is 1400 orders per week

30% nonworking (420), 70% working (980) of which 15% (147) were mislabeled

-CAT-O: 2,800 / 1400 = 2 weeks

-CAT-L: 500 / 1400 = 0.35 weeks = 2.5 days

-CAT-W: 833 / 1400 = 0.595 = 4 days

-147 of the CAT-W were mislabeled so we assumed these would only have the CAT-W label for a day or so, thus we did not include in the calculations

-CAT-DD: 420 / 1400 = 0.3 = 2 days