Greenlawn Commercial Package Businessa

(Allen et al. 2005, pp. 44-46)

Case Questions

1.* In conducting the analysis of whether or not the company should adopt the New Eraproject, one must select an appropriate decision horizon (or time frame) for the analysis. Two viable alternatives are (a) the upcoming year 2002, and (b) the projected life of thenew program. Discuss the relative advantages and disadvantages of these twoalternatives.

2. In conducting the analysis of whether or not the company should adopt the New Eraprogram, what should the unit of analysis be: a region, a truck, or a single application? Provide adequate support for your answer.

3.* Greenlawn has likely incurred substantial costs in developing its existing deliverysystems and procedures for treating lawns (e.g., proprietary computer-controlled trucks,contained-spray applicators, dual-spray line guns). Discuss whether or not thesedevelopment costs are relevant to the decision of whether or not to adopt the New Eraproject.

4. Using an average region as the unit of analysis and the upcoming year 2002 as thedecision time horizon, prepare a quantitative analysis of relevant costs and benefits as abasis for recommending whether or not the company should adopt the New Era project. Assume the average price for one application will be $400. Also assume the followingregarding the percentage cost changes presented on p. 46: the 56 percent reduction infertilizer and pesticide costs is on a per application basis; the 22 percent reduction inservice technician costs is on a per truck basis; and, the 32 percent increase and fuel andother direct operating costs is on a per truck basis.

5.* Suppose that the decision horizon used in your analysis in item 4 above was theupcoming 10 years rather than just the upcoming year 2002. Also, suppose that the NewEra project is expected to generate $6,000,000 of revenue for each of those 10 years. Discuss whether or not your analysis should treat $6,000,000 of revenue in 2011 asequivalent to $6,000,000 of revenue in 2002.

6. Discuss qualitative factors that might have an impact on whether or not the companyshould adopt the New Era project.

7. Discuss limitations of the analysis performed in #5 above.

* Written responses to these questions are due at the beginning of class on Thursday,October 11.