Use the Case Study presented here to answer the questions below. Your answers sh
ID: 429354 • Letter: U
Question
Use the Case Study presented here to answer the questions below. Your answers should be long enough to answer each question fully and completely and typed below the individual question in this document. Follow the instructions in the questions to determine the appropriate length of your responses. Your answers should demonstrate an understanding of the concept(s), should apply critical thinking, and should provide analysis of the Case Study in light of the concepts(s). You should not just re-iterate what has been presented in class, but integrate the information and relate it to the Case Study. Proper APA style must be used for any citations and references that you use. Your exam will be graded on the completeness and accuracy of your responses and whether you have appropriately tied your responses to the Case Study. Responses that do not mention the Case Study will receive very few points, if any. Each question is worth 10 points.
Virginia Bikes
Case Study
In 1985 Bill Thomas took $6,000 of his savings, borrowed another $4,000 from his best friend, and opened a bike rental business in Vienna, VA. The rental shop is adjacent to the Washington & Old Dominion Trail (W&OD) that goes from Purcellville to Old Town Alexandria (45 miles), connects to the Mt Vernon Trail (18 miles) and ends at George Washington’s Mt Vernon Estate. Bill, bought 10 bikes for his first store. The location has parking, and is near the historic Vienna Inn and a number of food and drink establishments. He has since opened stores in Old Town Alexandria and Reston, VA, where he sells, rents and repairs bicycles.
The Vienna store is now Bill’s anchor store, and at 5,000 square feet, it is three to five times larger than his other stores. Bill estimates he sells around 3,000 new bikes a year. Because of the high use of the W&OD trail, especially on weekends, he also provides tune up and maintenance services at all of his stores for the many riders from up and down the trail.
In 2012, Bill leased a store in the heart of D.C., near the Smithsonian Museums and other tourist attractions. He uses this store to rent bikes to tourists and residents of the city, and does some repairs to his rental bicycle inventory in the back of the shop.
Although he has always made money, or he would not be in business, Bill has seen a decline in bikes sales of about 20 percent since 2008. He attributes this to the downturn in the economy and the growth in Internet sales. However, his rental, tune up and repair business has increased dramatically. Over the past few years, he realized that he must be more aware of expenses and decrease them wherever practical in order to preserve profits.
Bill thinks that the one of the most important factors is the weather, but has no data to support that thinking. On rainy days, there are few customers in the stores, while on sunny weekends all of his locations are extremely busy. From spring through fall, Bill keeps all his stores open seven days a week, while in the winter months he opens his stores on the weekend when the weather is good for riding. Through observation, Bill figures his highest sales occur in May, and that June and September are his best months for rentals. He also sells many bikes during the holiday season in December, but in January and February, he often wonders if he should close shop and go to Florida for a couple of months.
Virginia Bikes grosses between $5 and $8 million annually and earns Bill a comfortable six-figure income. Each year, he leaves a considerable amount of cash in the business so that he does not have to borrow money to keep his business going. He sells a wide variety of bikes (from tricycles for toddlers to sophisticated racing bikes) and accessories such as helmets, speedometers, bike racks, repair kits, and clothing. Bicycle sales have decreased to account for 25 percent of revenues. Accessories such as helmets, bike racks, gloves, and locks amount to another 5 percent. Rentals make up about 35 percent, and repairs make up the remaining 35 percent.
In recent years, he has noted that customers are less likely to purchase the high-end road and triathlon bikes, and are purchasing bikes in the range of $400 to $1,000. The lower-priced bikes are also easier to sell and to keep the inventory moving.
Most of the rental business is concentrated in the downtown D.C. and Alexandria stores, due to the tourists and university students located near those stores. Bill is excited about rentals, as they have a huge profit margin. He can charge as much as $50 a day, which means the bikes pay for themselves after just a few rentals.
Bill’s expenses include such costs as new bikes, parts and accessories, rent and payroll. He negotiates leases for all his locations except the Alexandria store, which he owns outright. Bill has 15 full-time employees and usually hires another 15 part-time employees during the busy months and weekends.
Until two years ago, he was spending about $30,000 a year on advertising in local papers. Now he uses a simple website and has links on many of the local biking trail sites to provide information about his various locations, and his advertising budget is close to zero.
In the late 1990s, Bill over-expanded to six stores, including a store in Purcellville, VA, and one in Bethesda, MD. The expansion necessitated a warehouse in Springfield, VA, the hiring of a general manager and considerable overhead expenses. In a subsequent cost-reduction effort, Bill closed the Bethesda store, gave up the warehouse and moved his inventory to the Vienna store, and let the general manager go. Now, he handles all the general management tasks himself, which affects the time that he has available to plan and develop strategies.
Bill further reduces his expenses by working in the Vienna store two days a week. Since he has only one staff person in some of his stores, he has to make special arrangements if that person does not come to work, or takes a day (or week) off.
He is trying to expand the bicycle repair work, especially on the weekends, so he will be able to increase revenue from this profitable aspect of his business. He needs to have repair capability at each store to maintain the rentals, prepare the new bikes for sale, and perform the periodic maintenance for the bikes that he has sold, as well as provide the breakdown repairs and adjustments for the riders on the trail.
In an effort to increase profits, Bill tries to get good deals from his suppliers so he can realize a good margin on bike and accessory sales and repairs. He looks for situations where suppliers have more bikes in a line than they need and buys those bikes at a discount for rentals and low-end sales, while maintaining a rapport with high-end suppliers so that he can offer his customers the best at reasonable prices. By doing so, he can sell bikes at a lower retail price with on-the-spot delivery while still realizing a nice profit.
Bill has no bank debt and has long since repaid the $4,000 he borrowed from his friend to start the business. He feels that, because he has a diverse business strategy that addresses the many different aspects of the local bike business, he will do well in the many different economic climates as long as he is able to manage his varied business. He also feels that he is insulated from “substitutes” from the electronic world, due to the rental and repair aspects of his business.
Bill is seeking your help to analyze his business and identify areas where information systems could help him better manage and grow his business.
Questions:
The three business process listed in question #3 were: Selling Bicycles, Repairing Bicycles, Managing Inventory
4. a. Using the three business processes listed in question #3, list one input andone output that would be part of that process. (These are for the entire process, and are not limited to any particular step in the process.)
Process
Input
Information/data item entered into the system as part of this process
(input needed for the system)
Processing
Processing or action the system must perform for this process
(what the system will do with the input)
Output
Information/data item displayed or printed out for the user in this process
(what the system will output/display)
Selling Bikes
Repairing Bikes
Managing Inventory
b. Bill has decided to use technology to improve one of business processes identified in question #4 above. Select one of the processes and analyze the IT requirements as they apply to that process using the table below.
Name the business processthat you selected here: __________
IT
Requirement
Importance/
Relevance
High,
Medium,
Low, or Not Applicable (N/A)
(each must have a ranking)
Explanation for Ranking
(Write a minimum of 3 good sentences for each. Use the name of the business and the selected process in each answer. Identify the data or type of data used in your explanation, where it applies.)
Usability
Information Quality
Database
Reliability/ Availability
Security
Virginia Bikes
Case Study
Explanation / Answer
1. Selling Bikes:
Input - Product line product details
Throughput / Processing: Analyze the database for these products as fed in the input.
Output: MIS reports on the different product pricing, sales (past, current and projected) with their respective inventory holding in the distributed locations. Sensitivity of advertising on sales achieved.
2. Repair of Bikes:
Input: Different locations and the database of business in these locations.
Processing / Throughput - Analysis of the database
3. Output: MIS reports on the revenues from the different locations and their respective costs. Customer waiting times.
Managing Inventory:
Input: Products in the product line.
Throughput: Analysis of the database.
Output: Stock holdings of bikes, accessories and spares with past, present and projected figures in the multiple locations. The EOQ values for reordering these. Get to see the fast moving items from the slow moving ones and would thus help optimize the inventory holding.
Managing Inventory:
IT requirement: High importance because much of the business revenue is from renatls and repairs. For adequate service levels for retaing current customer base and paving the way for future ones, the distributed locations must be able to promptly service customer requests. Having the optimal inventory levels and least waiting times would be the major benefits from such a system.
Usability: Importance is high. The business transactions would be readily captured online by having a RDBMS suited for small businesses. The user friendly systems of today would enable the stores to carry out the day to day business transactions using this system online.
Information Quality: Importance is very high because data integrity and reliability is at the very core of having such a system in place. MIS reports would be accurate to make proper informed decisions.
Reliability / Availability: Importance is high as all the data would be online and the business processes at the transaction level would be online in the respective locations on laptops. The RDBMS would enable one to have secure database and user friendly front-end.
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