Fbo Case Essay

1250 Words Mar 5th, 2009 5 Pages
FBO, Inc. is a “Fixed base operator” at the Metropolis airport whose business is divided into two groups of operations, namely

a) Refueling of Commercial (40%) under contract & Retail (60%)

b) Provision of a variety of services (refueling, maintenance, and Avionics) to private and corporate aircraft.

Reiling, the General Managers is concerned that the commercial contract operations are not being performed as efficiently as possible and is considering a variety of alternatives to alter operating procedures and operations control. At the same time, if pooling is deemed inappropriate then the implementation of a different format in the face of a hostile management/union relationship is a concern.

This
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X 1.25 (fringe benefits)) 195,000

Refuelers (23 x $13.00 per hour x 40 hrs/wk x

52 wks. X 1.25 (fringe benefits)) 777,400

Overtime (14% of labor) 136,136

Total Labor Cost 1,108,536

Equipment (lease cost)

Trucks (11 x $2400/mo x 12 mos) 316,800

Operating & Maintenance Cost (11 x 10,000) 110,000

Total operations cost 1,535,336

Gross Profits 1,024,664

Utilization of Labor:

As per case 5 leads, 23 refuelers are available to perform task. In a given day 8.5 hrs per person. Assume ½ hr lunch, 2 10 mins break and a 10 mins cleanup, net of 7.5 work hrs per person per day.

= 23 person x 7.5 hrs per day x 5 days per week = 862.5 hrs per week and hence 51,750 minutes

Overtime payments -> 14% of regular wages. 1.5 times the regular

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