Case study analysis-w5 united screen printers

**please include introduction and conclusion for each as well as answer the following questions**

 

Hint: research unfamiliar terms on the Internet.

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W5 United Screen Printers

United Screen Printers (USP) produces a wide range of decals for displaying promotional messages on 

fleet vehicles (including delivery vans, eighteen-wheelers, and aircraft). Its decals range from flat-color 

designs to full-color photographic reproductions.

Although it is one of the oldest forms of printing, screen printing is superior to most of the more modern 

approaches because it permits making heavier deposits of ink onto a surface resulting in more vibrant 

and longer lasting finishes. Screen printing works by blocking out areas on a silk screen so that ink 

passes through only the unblocked areas to make an impression on the vinyl decal.

Many in the industry believe that the economics of fleet graphics makes them an extremely attractive form 

of advertising and should lead to their continued penetration of a largely untapped market. One industry 

source estimated that the cost of fleet graphics works out to be $2.84 per 1,000,000 visual impressions. 

Given the highly cost effective use of fleet graphics as a form of advertising, it is speculated that 

organizations will increasingly exploit this form of advertising. In addition, as organizations become better 

aware of this advertising medium, it is likely they will want to change their message more frequently. 

According to managers at USP, this may be one of the major factors apparently driving the competition to 

focus more on short lead times and prices, and less on decal durability.

USP is about to begin its annual evaluation of proposed projects. Six projects have been proposed as 

described below.

1. Purchase new large press.

Currently a three- and-half to four-week backlog exists in the screen printing department. This results in

USP’s total lead- time of 4 to 6 weeks in comparison to an industry average lead-time of 3.5 to 4 weeks. 

In a typical month, USP ships 13% of its orders early, 38% on-time, and 49% late. It has been estimated 

that 75% of the backlog is waiting for press 6, the largest press in the shop. Furthermore, press 6 is in 

dire need of replacement parts but USP has could not, thus far, locate a source for these parts. Given the 

problem of finding replacement parts and that the press is somewhat outdated, this proposal calls for 

purchasing a new large press for $160,000. Based on estimates that a new large press could process 

jobs 50% to 100% faster than press 6, it is calculated that the payback period for a new large press would 

be one year.

2. Build new headquarters. 

USP’s CEO fervently believes that the company needs to have a strong corporate identity. He therefore 

purchased land and had plans drawn up for the construction of a new corporate headquarters. Analysis of 

the new headquarters indicated that although it would improve operating efficiencies, the savings 

generated would not pay for the new building (estimated to cost $4 million). Many of the board members 

viewed the project as too risky because it would increase the company’s debt as a percent of capital from 

almost zero to 50%.3. Pursue ISO 9000 certification. 

This proposal also comes from USP’s CEO. ISO 9000 is a set of standards that provides customers with 

some assurance that a supplier follows accepted business practices. In some industries obtaining ISO 

9000 certification is essential, such as in industries that export to Europe or service the domestic 

automobile industry. It was less clear what competitive advantage pursuing ISO 9000 would provide USP 

at this time. On the other hand, the process alone would help it document and perhaps improve its 

operations. The cost of this initiative was estimated to be $250,000 to $300,000 and would take one year 

to complete.

4. Develop formal procedure for mixing inks. 

This proposal comes from USP’s plant manager. At present, mixing inks is a highly specialized skill that 

consumes 2-3 hours of the team leader’s time each day. This project would focus on developing ink 

formulas to make the task of mixing inks more routine, less specialized, and subjective. The team leader 

is paid $25,000 annually. The cost of pursuing this project is estimated to be $10,000.

5. Purchase and install equipment to produce four-color positives in-house. 

The lead time to have positives made by an outside supplier is typically one week and costs $1,500 to 

$6,000. According to this proposal, the cost of purchasing the equipment to produce four-color positives 

in-house would be approximately $150,000 plus $25,000 for installation and training. The variable costs 

of producing positives in house are estimated to be $375 per job. If produced in-house, the lead time for 

the four-color positives would be approximately an hour-and-a-half.

6. Purchase inkjet printers. 

An alternative to purchasing a new screen printing press is to add capacity based on newer technology. 

Given the inkjet’s production rate, six inkjet printers at a cost of $140,000 would be needed to provide the 

equivalent capacity of a new large screen printing press. The major disadvantage of the inkjet printers is 

that compared to the screen printing process, the outdoor durability is more limited. In general, inkjet 

printers are more economical for small orders, while screen printing presses are more economical for 

large orders.

USP currently has annual sales of approximately $7 million. It typically allocates up to 10% of sales to 

these types of projects.

Questions:

1. Construct an aggregate project plan tor USP.

2. What criteria would you recommend USP’ use in selecting its projects this year?

3. Based on your recommended criteria and the aggregate project plan, what projects would you 

recommend USP fund this year? 

4. Are there any types of projects you would recommend USP pursue that were not proposed?

5. What, if any, additional information would you want in making your recommendations? 

6. How would you go about obtaining this information?

Justify your answers by referring to the case study and other online (only) sources.

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