Carolyn Evans manages the lunchroom at West High, a large (approximately 1,600 students) school in Scottsdale, Arizona. The current cash payment system requires four cashiers (paid $8 per hour), employed for about 6 hours a day. The lunchroom operates approximately 250 days a year.
Carolyn is considering an electronic system, where a student could just swipe an ID card for payment. This system would cost $15,000 to set up and $2,000 per year to operate. Carolyn believes that she could manage with two cashiers if she were to implement the system.
Required:
a. Ignoring the time value of money, estimate the five-year cost savings from implementing the system.
b. What other qualitative costs and benefits should Carolyn consider in her decision? Comment on how such process reconfigurations help improve the effectiveness of organizational resources.