Equipment Selection RFID vs. UPC

1
Equipment SelectionRFID vs. UPC

• EGR 403
• August 22, 2005
• Team 3
• Saul Barbosa Equipment Research
• Ross Nichols Organizer
• Chih-Yun Sun Cost Analysis
• Greg Temple Summarizer

2
Equipment differences

• UPC Barcode

-Universal Product Code
-Parallel Bars Store Binary Code
-UPC Labels
3
Equipment differences

• UPC Labels

-Machine Readable
-Requires Manual Input
-Provide Information

• Product Fingerprint

• Help Inventory Tracking

• Identify Who Is Buying Products

4
Equipment differences

• RFID

-Radio Frequency Identification
-RFID Tags

• Intelligent Bar Codes

• Smart Labels

5
Equipment differences

• RFID Tags

-Automated Input
-Communicate To A Network
-Track Products Continuously

• Local Regional

• Incoming Outgoing

6
How do we profit?

• Time Savings
• Product Promotion/Location
• Manpower
• Universal Application
• Reduce Shrinkage
• Stronger theft deterrent

7
Product Promotion/Location

• Increase of Sales
• Promotional displays
• Active selling locations
• Promotional displays and there impact on sales

8
Basic Assumptions

• Blockbuster Corporation
• 1.4 Billion in annual sales
• 7265 Stores
• 2 Systems per store
• 194,000 annual profit per store
• 75 profit from register products

9
Costs of Equipment

• UPC
• 22,000 per system
• 10,000 magnetic security system
• Other Costs
• 18,000 Maintenance a year
• 1,500 a year for labels
• Annual Costs
• 207,725
• Includes Staff of 8 15 Shrinkage

10
Costs of Equipment

• RFID
• 55,000 per system
• Other Costs
• 18,000 Maintenance a year
• 15,000 a year for labels
• Annual Costs
• 157,800
• Including staff of 6 and 5 Shrinkage

11
Basic Analysis

• Based on Present Cost analysis with 10 interest
  for 5 years.
• NPC of UPC is 851,441
• NPC of RFID is 708,186
• Assume fixed output (profit)
• Lower net present cost will be more preferred
  therefore, RFID is the better option in this
  analysis

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Sensitivity Analysis

• Set NPC of UPC is 851,000
• Cost of RFID increases 50
• NPC of RFID is 763,000 (chose)
• If RFID doesnt improve sales or reduce shrinkage
• NPC of RFID is 791,000 (chose)
• If RFID doesnt cut down man power
• NPC of RFID is 866,000 (not chose)
• If the period extend to 9 years, RFID will be
  preferred.

13
Conclusion

• RFID
• Improve Efficiency
• Save Time
• Reduce Staff Size
• Expand Marketing
• Increase Sales