Question
As a leading company in the electric vehicle industry, Company X has been exposed to related repair and remanufacturing problems as its sales volume continues
As a leading company in the electric vehicle industry, Company X has been exposed to related repair and remanufacturing problems as its sales volume continues to increase. Among them, the more serious is the power battery repair and remanufacturing. The current repair cycle is generally 30-45 days, with some exceeding 60 days. The long cycle not only brings bad experience to owners with their cars, but also brings cost pressure to Company X continuously.
Currently, problematic batteries from all over the country are repaired at a factory in the east part of the US, and the number of workers needed to repair the production line is 14. With the increase in sales volume will further extend the repair cycle, the round-trip transportation cost is high for western, southern, northern and central US. At the same time, Company X needs to provide owners with replacement vehicles and bear the depreciation cost of the replacement vehicles during the repair cycle. Therefore, Company X plans to establish power battery repair centers in each major region one after another to improve customer experience and reduce operating costs. These centers are relatively small in size and require 5 to 8 workers for the repair production line.
Assuming the same power battery for Company X's current model, the repair probability of needing to repair the battery each month is 0.03% of the market holdings. The establishment of centers in each major region will save revenue from transportation, depreciation of mobility scooter use, maintenance labor, and customer complaint handling, but will require additional space rental, site renovation, and maintenance production line inputs. The relevant data for different regions is expected to be shown in the table.
For other related data, the projections are the same for different regions, including $2 million for site renovation, $150,000 for related design costs, $6 million for procurement and installation of maintenance lines, $100,000 for fire protection equipment, $50,000 for environmental protection, hazardous materials handling, etc., $100,000 for IT core network equipment, $200,000 for security equipment, etc.
Assuming that Company X has a desired payback period of 10 months or less and a desired internal rate of return of no less than 15%, use reasonable and credible assumptions and forecast analysis. By analyzing the company's car deliveries by year and month, and assuming that the ratio of ownership in Western, Southern, Central and Northern part of the country is 7.5 : 14 : 6.2 : 18.5, choose which city in which region to prioritize the construction of the center using economic analysis as the main focus. If a region is temporarily unable to build a center, how much retention does the region need to achieve in order to meet the investment requirements?
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