Northern Gas wants to move its sales order system online. Under the proposed system, gas stations and other merchants will use a secure site to check the availability and current price of various products and place an order. Currently, customer service representatives take dealers' orders over the phone; they record the information on a paper form, then manually enter it into the firm's computer system.

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Jensen revises her estimates of the benefits from the new system's lower labor costs. now thinks the savings will be only $$931,000.$

Requirements

Compute the expected benefits of the online ordering system.

Would you recommend that Northern Gas accept the proposal?

Before Jensen makes a final decision, what other factors should she consider?

Requirement $1.$ Compute the expected benefits of the online ordering system.

The expected benefits of the online ordering system are

Requirement $2.$ Would you recommend that Northern Gas accept the proposal?

Complete the cost$-$benefit analysis below to compute the expected net benefits $($costs$)$ of the project. $($Use $p$

Expected benefits

Expected costs

Net benefits $($costs$)$

Because the $,$ a cost$-$benefit analysis proceeding with the onlin

Requirement $3.$ Before Jensen makes a final decision, what other factors should she consider?

Cost Information

CFO Judy Jensen believes that dealers will not adopt the new online system unless Northern Gas provides financial assistance to help them purchase or upgrade their computer systems. Jensen estimates this one$-$time cost at $$740,000.$ Northern Gas will also have to invest $$170,000$ in upgrading its own computer hardware. The cost of the software and the consulting fee for installing the system will be $$235,000.$ The online system will enable Northern Gas to eliminate $25$ clerical positions. Jensen estimates that the benefits of the new system's lower labor costs will have saved the company $$1,357,000.$

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