CASE : Peerless Laser Processors Peerless Saw Company was in dire straits , wew they de idea to purchase their first laser cutting system Ever though they culd not justify the A'S in retrospect the investment "-avea " the mpany. The forvain, factors Gutributed to this situation Peerless was selling to the same customers out the laser system. had created a newr and rowving arket that had not previously e asted The ori inal . U. would have been based on a singe shift . Because C. to new market the co. pary actually operated the laser on to.0 Suitts To successsuny apply KOI. Peoniess would have had to , redict the creation Of the new .narnet a nearly impossible tas's . He.: did the laser cutter "save " Peerless Jaw Company when it could not be justified un payback or RO: grounds ? Does this mean that the economics of automation is not inpurtant . or at least were nut .or Peerless ? Compare the decision led faces now the 120u watt laser purchase with the decision ne caved in 1981 when he was considering the three purun presses . Structure the investment decision for each of these cases . As ume a computer busts about $20,000 and sort. . are about $80,0 0 Training costs are included in this charge .) Consider costs , benthits , and risks . ow nas the decision environment changed . Is Ted more or less comfortable with this decision : how i- this decision easier : 'ow is it harder ? What do you think the potential problems might be in purchasing the 1200 - watt laser : What about the potential benefits ? Will this laser wave the same impact on the business as the first laser : What are the strategic variables involved in these decisions Estimate costs and revenues for this new system to perfum. a payback analysis . use the variable cost data in Exhibit s; assume the laser cuts at the rate of "0 incues per minute that a typical biade of 14 inches sells for 25 (30 % discount for volumes near 100 units ), and the same computer and soitware will be used as currently . Material load time for a 10- blade sheet u. steer is one minute Use a - -inch arbor huie size and ascume that a cut tooth doubles the cut distance . How would you address the quantification of the intangible benefits the new system might provide ? Is the near system justLied on an economic basis ? How might this system be more or less justifiable on an economic basis than the first laser system? 5 What are the organizational behavioral consideration- involved in tos purchase ? Are they the same as the first laser ? How might thas system be more or less justifiable un a noneconomic basis than the first laser system ? 6 Ted is thinking about offering 25 or his largest customers the opportunity to tie into his system directly from their offices . What benefits would this offer to the customers and Peerless ? What problems might it pose ? 7 . Advise Ted on the purchase of the new laser system
