The CRU Computer Rentals case study discusses CRU, a company that rents and leases computers. This case study aims to show the flow of business factors such as inventory, throughput, flow time and financial factors in the operation of a company. By looking at such factors, students will understand how a company's revenue flows in.
Harvard Business Review (KEL017-PDF-ENG)
January 01, 2002
Case questions answered:
- Draw a flowchart of CRU’s operations
- What was the utilization achieved by CRU last year?
- Calculate the average time spent by a unit in each buffer last year?
- Calculate the average weekly profit to CRU’s last year. Ignore labor and facility costs in this calculation; we assume that they are fixed. How does the contribution margin compare with the weekly depreciation?
- What do you think about the decision to launch a sales drive this year? If you had a chance to advise Sarkis, what actions would you suggest Sarkis focus on to improve performance at CRU? (Give a concrete plan listing the resulting benefits.) What are the key performance measures that he should focus on?
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Case answers for CRU Computer Rentals
This case solution includes an Excel file with calculations.
Case Summary - CRU Computer Rentals
- CRU is a computer rental company with 2 megastores and 23 local retails centers
- They have 3 types of clients – Large corporates, Small businesses, trade shows
- They had an average rental rate of 1000 per week
- The process ran through multiple departments like – Order receiving, QA, Picking, Configuration, Shipping, receiving, reconfiguration, repairs.
- CRU measured its performance based on utilization.
- Utilization = Inventory on Rent / Total Inventory Owned by CRU.
- Lately, they have been having a severe dip in the utilization level and had to run incentives and special prices to shoot up the utilization rate. But even with a higher utilization rate, it was observed that their profits went down instead of going up.
Draw a flowchart of CRU’s operations
What was the utilization achieved by CRU last year?
- Utilization = No. of units on rent / No. of units owned by CRU = Inventory on rent/ Total inventory
- No. of units on rent = No. of units rented per week* No of weeks = 1000*8 = 8000
- Total Inventory = Sum of no. of inventory units in the buffers(Customer, Receiving, Status 24, Status 40, Status 41, Status 42, Status 20) =
- 8000+500+1500+1000+500+500+2000+405 = 14405
- Therefore, Utilization = 8000/14000 = 0.55 or 55.00 %
Calculate the average time spent by a unit in each buffer last year?
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