Bed Cellar Case Study

 

Read the case study 

The Bed Cellar

and act as a business consultant who advises a client on what hardware and software to choose.

Write recommendations in a proposal format.

Use the Owl at Perdue INDOT Writing Proposal Handout (

https://owl.english.purdue.edu/owl/resource/727/23/

) for guidance on the formatting and content. You do not have to include all sections in the handout, but include those that are relevant to your proposal.  Be sure to include the cost and benefits in your proposal as well.  

THE BED CELLAR

As part of your MGT438 course, you must study an existing business and design a new strategy to

improve the business. You remember seeing a downtown furniture store that specializes in beds. You

know the store because you bought a water bed there at the beginning of the semester and talked with

the owner for some time while you decided on the bed you wanted. You drive to the store, walk inside,

and ask to see the owner. The owner, Albert Mendoza, comes out and greets you, “Didn’t you buy a

water bed from us a month or so ago? How do you like it?” After some brief conversation you explain

that you want to use his store as the basis for your MGT438 project. Mendoza says, “Sure, you can study

our operation. Come over here and let me introduce you to Alice and Ray.”

You walk over to an elderly lady who is writing in a huge ledger—Alice Cook, the book keeper. Alice has

been with Bed Cellar for twenty-three years and has been the only person to keep the books for all

three stores. She receives weekly reports from the other two stores and records daily information for

the primary store. You turn to Mendoza and say, “I thought I saw a computer in here a couple of

months ago.” “That’s right,” he replies.

“We have a computer that I bought four years ago. We keep it in this room next to my office. Come on

over and I’ll show it to you.”

The computer room is actually a closet. To use the computer you have to open the closet door, pull up a

chair from another room, and turn on the closet light—the power cord for the computer is attached to

an outlet of the closet light. “This one’s kind of a classic,” Mendoza tells you, “You know, they don’t

make these anymore.” You know he’s right, the brand name is North Chase Micros, one of the personal

computer makers that lasted a few years and went out of business.

About that time, another man walks in. He is Ray Silva, and he divides his time between operating the

computer and selling furniture. The computer is used for about two hours a day to print price tags that

are placed on furniture. The price tag includes the price, a code the sales person can read to determine

the cost, a bar code, and information about the manufacturer and the product. The computer also keeps

inventory records on all items located in this store and two other Bed Cellar stores in nearby cities. The

computer is supposed to maintain records of installment payments, but Alice keeps that in the ledger.

Mendoza tells you the story of the computer. On the advice of his accountant, he purchased it from

another furniture store in Syracuse that was also a client of the accountant. The other furniture store

had purchased the computer from North Chase Micros and an employee at the store created all of the

software. When the other store prospered, it bought a new computer. The price for the North Chase

Micros computer was too low for Mendoza to refuse so he decided to plunge into the computer game.

It has been a sobering experience, to say the least. The software that came with the computer is written

to handle the accounts of a single store, so the three locations of Bed Cellar cannot be consolidated

which is why Alice keeps a manual ledger.

Alice keeps the books by hand. Ray processes the inventory and receivables transactions on the

computer, and Alice also does them by hand to check the computer.

You ask if there is any documentation for the software (directions, record descriptions, operating

procedures, and so on), and you find out that there is none. You also learn that when anything goes

wrong, a consultant must come from Syracuse to solve the problem. He is the only person who

understands the software. His daily rate is $350 plus mileage. To make matters worse, nobody at Bed

Cellar knows anything about programming. Ray knows some spreadsheet software but the computer is

not capable of running the spreadsheet software that is sold today. Ray knows how to operate the

system, but if anything goes wrong, he calls the consultant.

Alice is retiring at the end of the year, and Ray is leaving at the end of the month to go into the

aluminum siding business. You ask Mr. Mendoza what is his strategy for replacing Alice and Ray? You

ask “What is the overall strategy and mission for the business?” Mr. Mendoza says to make a profit.

What is the vision for the future of the business? He says he is looking to expand with two more stores.

You ask Mendoza if he is collecting any data that can be used to track company financials in all three

stores. “yes, I’m do,” he says. But I still have trouble knowing what’s selling and what isn’t, how much

profit we’re making on our different lines, and profit margins. Alice has been keeping the manual

system, but compiling the information for income tax purposes alone takes a considerable amount of

time.

You tell Mendoza you’ll get back to him about the MGT438 project. You are at a loss for words. You had

expected a success story like the ones you heard in class. This seems to be a real can of worms. You say

goodbye to everyone, and as you start to walk out the door, Mendoza calls out, “Hey, I couldn’t sell you

a dresser to go with the water bed, could I?”

Assignment:

How can you convince Mendoza to scrap the North Chase Micros computer based upon the cost of

repairing the computer compared to the cost of a new computer?

Find the cost of a new computer at a Web site. The computer does not have to be very powerful to meet

Mendoza’s needs. What would be the dollar savings over a three-year period? Show your assumptions.

Mendoza had certain software applications in mind when he purchased the personal computer. what

were those applications? What other applications do you believe Mendoza should use for his store

operations?

Mendoza is about to lose both his bookkeeper and the only employee who knows how to run the

computer. Should Mendoza become computer literate? If so, how?