PROJECT SELECTION CRITERIA AND A HIGH LEVEL PROCESS/ TUTORIALOUTLET D PROJECT SELECTION CRITERIA AND A HIGH LEVEL PROCES | Page 5

million dollars to initially set up the project and $500,000 a year to
operate the facility. This initial cost can be spread evenly over each of
the four quarters of the entire year. These initial costs should be
recovered within the first three years of operation. Most of the work
of this project would be outsourced and management of the project
would be extremely difficult.
Project Robot
Our key distribution center is in St. Petersburg, Florida. It has a staff
of 100 individuals to process the linens for the Florida cruise industry.
Automation would allow us to reduce staff by 35 individuals. The
average burdened labor costs of each of these individuals is $45,000
dollars a year. The cost of such automation would be in the
neighborhood of $17 million dollars. This initial cost can be spread
evenly over the entire year. This project would also likely disrupt the
facility for about 3 months while the work is being done. Upon
completion, the newly remodeled facility will be 1/3 smaller allowing
our need for warehousing space to be reduced by 1/3. This would
allow us to sublet this space for an estimated $2 million dollars a year
in revenue. Most of the work of this project would be outsourced.
Project Tableware
In order to become the provider of choice for the cruise industry, our
company needs to expand to more than just linens. A suggestion was
made to expand into supplying tableware to the cruise industry, as
much tableware is lost every cruise to breakage. Currently this need is
supplied by a number of smaller companies that we could easily
compete with. This project would involve creating a Just In Time
process to receive and supply the cruise ships. It would also involve
the need for a minimal warehouse facility. This project is likely to
cost $5.5 million dollars and have a NPV of $1 million dollars over
five years. All initial costs can be spread over any two quarters of the
upcoming year. It would likely take four years to recover the initial
costs of this project. It would further cost approximately $300,000
dollars a year to operate this facility. All of the work of this project
would be outsourced.