I HAVE MOSTLY COMPLETED THIS ASSIGNMENT. WHAT I NEED IS FOR IT TO BE REVIEW, CORRECTED, AND COMPLETED WHERE NECCESSARY. AS IT STANDS ITS ABOUT 90% COMPLETE. KINDLY COMPLETE THE XCEL DOCUMENT AND ANSWER THE QUESTIONS BELOW ON THE WORD DOCUMENT.
Short Answer Questions
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MGMT 386 project management
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- [20 points] For the first relocation project carried by Route 11 Potatoes Chips, please identify and briefly describe the different project stages, based on the information contained in the article “Route 11 Potato Chips finds success as a cult in a fiercely competitive market”.
- [20 points] If Route 11 Potatoes Chips were to continue to grow, briefly describe how they will select which expansion alternative is the more suitable among the numerous projects that could be done.
Project Valuation Problem
- [60 points] Mini case: Route 11 Potatoes Chips has decided to expand and open a new production facility. There are three projects with three different locations for the factory. The file Route11.xlsx contains an aggregated summary of the inflow and outflows for each project over a horizon of 6 years. Also, there is a brief description of each location including potential design improvements. A Multi-Weighted Scoring Matrix is also provided in the file. Based on the article and in the information provided in the MS Excel file, please answer the following questions:
[25 points] Assuming a MARRmarket of 13.5% and an inflation rate of 1.9% over the 6 years, rank each alternative considering the financial criteria provided in the matrix (use a 1-3 scale, where 1 is the least liked alternative).
[25 points] Based on the brief description of each alternative and based on the article your read, rank each alternative (and briefly justify your ranking) considering the strategic and operational criteria provided in the matrix (use a 1-3 scale, where 1 is the least liked alternative). Which criteria are Strategic (would support long term growth of Route 11? Which criteria are Operational (would support the day to day operations of Route 11)?
[10 points] Would your rankings change if the potential design improvements for each alternative are implemented?
Damien Montelongo Gallegos
MGMT 368
Professor Correa Martinez
01/30/2020
1.) For the
first
relocation project carried by Route 11 Potatoes Chips, please identify and briefly describe the different project stages, based on the information contained in the article “Route 11 Potato Chips finds success as a cult in a fiercely competitive market”.
The initiation stage took place when they realized a need for a factory was necessary and they saw an article in the Washington Post featuring a chip factory for sale Chesapeake Chips. Through planning they realized that this factory met their requirements to continue to grow. The continued to execute their growth through sales, and delivering their product.
2.) If Route 11 Potatoes Chips were to continue to grow, briefly describe how they will select which expansion alternative is the more suitable among the numerous projects that could be done.
The best strategy would be to find the balance between they highest ROI and NPV.
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>ORIGINAL VALUATION-
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| MARRmarket |
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| 1 |
| 4 |
%
| <<>>
YOU DO NOT NEED TO ENTER A FORMULA THERE. |
Multi-
|
| Weight |
ed Scoring
|
| Inflation |
1.9% |
| Strategic |
| Financial |
|
| Adj. Rate |
11.38% |
| <<>> |
| Criteria |
| Core
competency |
| Closeness to Suppliers |
| Strategic
Fit |
| Market
Dynamics |
7
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| 5 |
%
renewable
energy sources
Reduce
waste 5
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| 0 |
%
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| ROI |
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| NPV |
| Weighted
total |
Weight
|
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|
| 1
|
| 5% |
15% |
5% 5%
|
|
| 10% |
10%
| 25% |
15%
| 100% |
|
| Project 1 |
3 2
1.05 |
|
| Project 2 |
2 1
0.
|
| 6 |
5
|
| Discount Factor |
1
0.8977973568 |
0.8060400939 |
| 0.7 |
236606658
0.649700633 |
0.5832995111 |
0.5236847593 |
| Project 3 |
1 3 0.7
|
| Investment Period |
0 1 2 3 4 5 6
|
| PROJECT ONE: New Factory Location A
Closest location to farms, located in new geographic district, designed to expand capacity the current product lines. State rebates for sustainable design, however, waste cannot be used as energy source. |
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| Inflow |
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| $ – 0 |
$ – 0
| $ 950,000.00 |
| $ 1,200,000.00 |
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| $ 1,000,000.00 |
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| $ 1,450,000.00 |
| $ 1,600,000.00 |
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| Outflow |
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| $ 1,950,000.00 |
| $ 650,000.00 |
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| $ 150,000.00 |
$ 150,000.00
| $ 300,000.00 |
$ 150,000.00 $ 150,000.00
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| Net flow |
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| = Benefits-Costs |
|
| $ (1,950,000.00) |
$ (650,000.00) |
|
| $ 800,000.00 |
| $ 1,050,000.00 |
$ 700,000.00 |
$ 1,300,000.00 |
$ 1,450,000.00
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| Discounted Benefits |
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| = Yearly Benefit*Discount Factor |
$ – 0 $ – 0
$ 765,738.09 |
$ 868,392.80 |
$ 649,700.63 |
$ 845,784.29 |
$ 837,895.61 |
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| Discounted Costs |
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| = Yearly Cost*Discount Factor |
$ 1,950,000.00
$ 583,568.28 |
$ 120,906.01 |
$ 108,549.10 |
$ 194,910.19 |
$ 87,494.93 |
$ 78,552.71 |
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| Disc. Benefits-Disc. Costs |
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| = Disct Benefiits – Disct Costs |
$ (1,950,000.00)
| $ (583,568.28) |
| $ 644,832.08 |
| $ 759,843.70 |
| $ 454,790.44 |
| $ 758,289.36 |
| $ 759,342.90 |
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| Cummulative [Disc. Benefits – Disc. Costs] |
$ (1,950,000.00) $ (583,568.28) $ 644,832.08 $ 759,843.70 $ 454,790.44 $ 758,289.36 $ 759,342.90
NPV
| $ 843,530.20 |
ROI
| 27.00% |
|
| PROJECT TWO: New Factory Location B
Far from farms but within proximity to railroad and interstate highways, designed includes facilities for two new product lines. 100% solar energy but poor disposal alternatives. New product lines could bring an extra 10% in inflows per year, and will have an extra maintenance cost of $75,000 per year |
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| Design Alternatives |
Inflow $ – 0
|
| $ 500,000.00 |
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| $ 750,000.00 |
$ 1,000,000.00 $ 1,000,000.00 $ 1,000,000.00
| $ 2,000,000.00 |
| additional benefits/year |
Outflow
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| $ 2,500,000.00 |
$ 150,000.00 $ 150,000.00
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| $ 200,000.00 |
$ 200,000.00
|
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| $ 250,000.00 |
$ 250,000.00
| additional maintenance cost/year |
Net flow = Benefits-Costs
| $ (2,500,000.00) |
$ 350,000.00 |
$ 600,000.00 |
$ 800,000.00 $ 800,000.00 $ 750,000.00
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| $ 1,750,000.00 |
Discounted Benefits = Yearly Benefit*Discount Factor
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| $0.00 |
$448,898.68 |
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| $604,530.07 |
$723,660.67 |
$649,700.63 |
$583,299.51 |
$1,047,369.52 |
Discounted Costs = Yearly Cost*Discount Factor
| $2,500,000.00 |
$134,669.60 |
$120,906.01 |
$144,732.13 |
$129,940.13 |
$145,824.88 |
$130,921.19 |
Disc. Benefits-Disc. Costs = Disct Benefiits – Disct Costs
|
| ($2,500,000.00) |
| $314,229.07 |
| $483,624.06 |
| $578,928.53 |
| $519,760.51 |
| $437,474.63 |
|
| $916,448.33 |
Cummulative [Disc. Benefits – Disc. Costs] ($2,500,000.00) $314,229.07 $483,624.06 $578,928.53 $519,760.51 $437,474.63 $916,448.33
NPV
| $ 750,465.13 |
ROI
| 22.69% |
|
| PROJECT THREE: New Factory Location C
Closer to farms but limited access, with state plans for future highway expansion. Designed with similar specifications to current factory, with possibility of expansion. 50% solar powered and possibility of eolic energy due to location and state incentives. Design includes a WtE alternative, costing an additional $350,000 investment on year 1. |
Design Alternatives
Inflow $ – 0
|
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| $ 550,000.00 |
| $ 850,000.00 |
|
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| $ 1,150,000.00 |
$ 1,150,000.00 $ 1,750,000.00 $ 1,750,000.00
Outflow
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| $ 3,250,000.00 |
$ – 0
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| $ 100,000.00 |
$ – 0 $ 100,000.00 $ – 0 $ 100,000.00
| additional cost in year 0 |
Net flow = Benefits-Costs
| $ (3,250,000.00) |
$ 550,000.00 $ 750,000.00 $ 1,150,000.00 $ 1,050,000.00 $ 1,750,000.00
$ 1,650,000.00 |
Discounted Benefits = Yearly Benefit*Discount Factor $0.00
|
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| $493,788.55 |
$685,134.08 |
|
| $832,209.77 |
$747,155.73 |
|
| $1,020,774.14 |
$916,448.33
Discounted Costs = Yearly Cost*Discount Factor
| $3,250,000.00 |
$0.00
$80,604.01 |
$0.00
$64,970.06 |
$0.00
$52,368.48 |
Disc. Benefits-Disc. Costs = Disct Benefiits – Disct Costs
|
| ($3,250,000.00) |
$493,788.55 $604,530.07 $832,209.77
| $682,185.66 |
$1,020,774.14
| $864,079.85 |
Cummulative [Disc. Benefits – Disc. Costs] ($3,250,000.00) $493,788.55 $604,530.07 $832,209.77 $682,185.66 $1,020,774.14 $864,079.85
NPV
| $ 1,247,568.04 |
ROI
| 0.3618297076 |
DESIGN ALTERNATIVE VALUATION-3C
MARRmarket <<>>
YOU DO NOT NEED TO ENTER A FORMULA THERE.
Multi-Weighted Scoring |
Inflation Strategic Financial
Adj. Rate
| 0.00% |
<<>> Criteria Core
competency Closeness to Suppliers Strategic
Fit Market
Dynamics
75% renewable
energy sources |
Reduce
waste 50% |
ROI NPV Weighted
total
Weight 15% 15% 5% 5% 10% 10% 25% 15% 100%
Project 1 0
Project 2 0
Discount Factor 1 1 1 1 1 1 1 Project 3 0
Investment Period 0 1 2 3 4 5 6
PROJECT ONE: New Factory Location A
Closest location to farms, located in new geographic district, designed to expand capacity the current product lines. State rebates for sustainable design, however, waste cannot be used as energy source.
Inflow $ – 0 $ – 0 $ 950,000.00 $ 1,200,000.00 $ 1,000,000.00 $ 1,450,000.00 $ 1,600,000.00
Outflow $ 1,950,000.00 $ 650,000.00 $ 150,000.00 $ 150,000.00 $ 300,000.00 $ 150,000.00 $ 150,000.00
Net flow = Benefits-Costs
Discounted Benefits = Yearly Benefit*Discount Factor
Discounted Costs = Yearly Cost*Discount Factor
Disc. Benefits-Disc. Costs = Disct Benefiits – Disct Costs
Cummulative [Disc. Benefits – Disc. Costs]
NPV $ – 0
ROI
|
|
| ERROR:#DIV/0! |
PROJECT TWO: New Factory Location B
Far from farms but within proximity to railroad and interstate highways, designed includes facilities for two new product lines. 100% solar energy but poor disposal alternatives. New product lines could bring an extra 10% in inflows per year, and will have an extra maintenance cost of $75,000 per year Design Alternatives
Inflow $ – 0 $ 500,000.00 $ 750,000.00 $ 1,000,000.00 $ 1,000,000.00 $ 1,000,000.00 $ 2,000,000.00 additional benefits/year
Outflow $ 2,500,000.00 $ 150,000.00 $ 150,000.00 $ 200,000.00 $ 200,000.00 $ 250,000.00 $ 250,000.00 additional maintenance cost/year
Net flow = Benefits-Costs
Discounted Benefits = Yearly Benefit*Discount Factor
Discounted Costs = Yearly Cost*Discount Factor
Disc. Benefits-Disc. Costs = Disct Benefiits – Disct Costs
Cummulative [Disc. Benefits – Disc. Costs]
NPV $ – 0
ROI ERROR:#DIV/0!
PROJECT THREE: New Factory Location C
Closer to farms but limited access, with state plans for future highway expansion. Designed with similar specifications to current factory, with possibility of expansion. 50% solar powered and possibility of eolic energy due to location and state incentives. Design includes a WtE alternative, costing an additional $350,000 investment on year 1. Design Alternatives
Inflow $ – 0 $ 550,000.00 $ 850,000.00 $ 1,150,000.00 $ 1,150,000.00 $ 1,750,000.00 $ 1,750,000.00
Outflow $ 3,250,000.00 $ – 0 $ 100,000.00 $ – 0 $ 100,000.00 $ – 0 $ 100,000.00 additional cost in year 0
Net flow = Benefits-Costs
Discounted Benefits = Yearly Benefit*Discount Factor
Discounted Costs = Yearly Cost*Discount Factor
Disc. Benefits-Disc. Costs = Disct Benefiits – Disct Costs
Cummulative [Disc. Benefits – Disc. Costs]
NPV $ – 0
ROI ERROR:#DIV/0!
Sheet2
