WHIRLPOOL EUROPE NPV ANALYSIS CASE STUDY

Exhibit 3 shows the data for the different Waves in In such a case, the cash flows beyond would not be attributable to project Atlantic, and the company will have to make separate cash flow projections. The case analysis of S The write-up should be at least two pages and a maximum of six 8. There are two types of gross margins that are of interest in these projections. The case write-up is due on Wednesday December 15 before class.

The system has to be implemented over several processes across several countries, and therefore, customization might be required to integrate the system with every process. On the first page, please clearly list the names of all the people in the group. As the company is frequently coming up with improved products, it is difficult to predict the demand pattern of such innovations, thus making it difficult to forecast demand. Note that the total savings are displayed in Exhibit 6. The internal rate of return IRR comes out to be

The company would have to incur certain costs in order to ensure proper implementation and functioning for the ERP system. Even if the actual results slightly differ from the projections, project Atlantic would still remain profitable, hence the investment is recommended.

What are the after-tax cash flows for the proposed ERP investment from through ? ERP offers system integration and smooth flow of consistent information across the entire supply chain, thus ensuring better and accurate demand forecast. Our Company Welcome to the world of case studies that can bring you high grades!

It is also assumed that sales mix of units sold remains the same over the entire 9 years, which also means that per unit sales price remains unchanged. Make sure that you address all the case questions. Problem Whirlpool Europe is a very large organization that functions its operations in 11 plants, two central and 12 regional distribution centers, and a country sales office in each major European market.

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Whirlpool Europe Case Analysis_图文_百度文库

Please email me your report by class time 6 PM. Its main products include microwave ovens, dishwashers, refrigerators, freezers etc. Thus increase in product availability and cost reduction results in increased revenues and improved margins.

The best way to structure this case is probably to first look at each Wave separately, and then aggregate the items on firm-level at the cade. What are your major concern s? The payback period for the project is 3.

whirlpool europe npv analysis case study

Hence these predictions could be incorporated in the forecasts. As we move further in time, the accuracy of forecasts decreases.

whirlpool europe npv analysis case study

The result is shown as analysix Then add any changes in sales i. Project Atlantic aims to make the company more responsive to the demand uncertainty.

But before making any final decision, the company needs to evaluate the financial aspects of this significant investment plus take into account qualitative issues that can arise during and after its implementation.

These analydis would certainly be affected by the technological advancements in the industry, and as such innovations are unpredictable to a certain degree, the actual results might differ from projections.

Since the incremental revenues comes in the year soon after the Wave West implementationthe revenues for are studj as base year and are assumed to remain the same for This leads to high unnecessary inventory, and in some cases, stock outs.

It is about how you come up with those numbers and how solid you can defend your calculations.

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Estimated capital expense and operating expense from are demonstrated as follows. Which of the three different benefits Whirlpool is expecting from the new system matters most for the value of the project? It is unclear from the case text exactly what the implication of an increase in product availability means for sales, so let me here explain whiirlpool in more detail. The increase in inventory visibility helps to recognize bottlenecks in the system, which helps in increasing process efficiency, reducing costs and improving product delivery time.

DSI is an inverse measure of inventory turnover, and tells us how long inventory is stored before it is sold on average.

The current information system does not allow integration of sales and manufacturing, which makes accurate sales forecasting difficult at manufacturing level.

Whirlpool Europe Erp Case

Furthermore, it is assumed that any sales increase that comes from reducing returned orders is already incorporated in the incremental revenues. In the long-term, it gets harder to predict the changes in both the internal and the external environment. That is, identify three other factors that you think are value drivers and perform a sensitivity analysis regarding these factors.

It will be calculated based on data. As this prediction is difficult in the long-run, the cash flows beyond might not be predicted accurately. Basic Data used in the analysis:

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