Chris Evans manages the lunchroom at West High, a large school in Scottsdale, Arizona. The current cash payment system requires four cashiers (who are paid $8 per hour), employed for about 6 hours a day. The lunchroom operates approximately 250 days a year.
Chris 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. Chris believes that he could make do with two cashiers if he 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 Chris consider in his decision?
Comment on how such process reconfigurations help improve the effectiveness of organizational resources.