Easyinternetcafe Essay

2640 Words Jan 31st, 2013 11 Pages
Executive Summary:
This case report addresses the challenges to implement a new logistic system that if well implemented it can improve operations and can convert easyinternetcafe into a profitable company.
EasyInternetCafe (eIC)is a chain of Internet cafes with stores in the UK, the USA, Holland, Belgium, France, Germany, Spain and Italy. eIC is part of the Easy Group, headed by the Greek entrepreneur Stelios Haji-Ioannou.
The original business model is to build and operate on the principle of ‘economics of scale’ or Yield Management: most stores would be open 24 hours a day, 7 days a week, and each has an average of 350 PC’s.
In 2003, with losses continuing to mount, eIc management has decided to radically revamp their operations.
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Now the company should combine orders for equipment for stores opening within the same window of opportunity. This means that the company can wait for several new stores’ request to come in, as long as the delay in ordering would not delay the overall project plan for any particular store.
With the current logistics situation eIc would have to spend approximately £1300 for all the logistics activities involved in opening a new store, not including the outbound transport to the franchisee. This figure included eIc labor costs of £602 per store. In other words, the total annual logistics costs (excluding outbound transport costs which were eventually billed to the franchisee) were approximately £270,000, which included annual labor costs of £125,250 (based on 208 stores opening per year). It is noted that if store openings were fewer, the labor costs were still considered to be fixed.

Outbound transportation costs of

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