Developing a Feasibility Study for an Enterprise-wide Wireless LAN

LAN
Before continuing with the design phase of the project, Debra, the project manager
for the wireless LAN project, needed to develop a feasibility study for the project for
Bob, the company president. Debra and Brian, the business analyst, spent some time
defining the cost-saving benefits that the manufacturing company would realize if it
implemented the system.
Based on the time studies that Brian had completed during the requirements phase,
they were able to estimate the amount of time that a warehouse clerk would save by
using an AIDC-based solution for each warehouse function. This provides a basis for
determining labor savings and efficiency gains. For example, Brian found that the
time it takes a clerk to receive each item takes approximately 30 seconds. The use of
an AIDC system for receiving items will take only 10 seconds. This is a time savings of
20 seconds per item. Each warehouse receives an average of 5,000 items per day,
resulting in a time savings of 27.7 man-hours per day. Based on similar analysis techniques,
the total time savings per day for all the functions using the AIDC system is
100 hours per day, resulting in 36,500 hours per year. Based on an average pay for
warehouse staff of $10 per hour, the annual labor savings for using the AIDC system
is $365,000 per warehouse per year. The total labor savings per year for all nine warehouses
is then $3,285,000. Of course the company will realize this savings only if it
downsizes the warehouse staff, and the savings will begin after the system becomes
operational. Other benefits of the AIDC system will include faster deliver times to customers
and better accuracy of inventories. The return on investment for this project is
positive. The company will need to invest a sizable amount of money, but the resulting
labor savings are substantial. The first year of operation of the system will recover
the initial investment and still provide some additional savings.
The benefits for implementing a wireless LAN within the corporate offices were very
difficult to quantify; however, Brian felt that the implementation of a wireless LAN in
the office areas would help foster ideas on how to apply wireless technology in an
office. Even though the company already had a wired Ethernet LAN, Brian did some
research and found significant cost savings with wireless LANs associated with not
needing to install cabling, and the prices for wireless LAN cards were only approximately
$75 higher than Ethernet cards with equivalent performance. After doing
some comparisons, Brian concluded that a company could install a wireless LAN for
nearly the same cost as installing an Ethernet LAN. With similar costs, a wireless LAN
seemed to be a preferred alternative, especially if the company utilized mobile enduser
devices such as laptops.
Based on the feasibility study results, the executive team decided to allocate the
needed capital, and Bob gave approval to Debra to go ahead with the implementation
phase of the project. Bob made it clear, though, that capital was available to
cover only $1.2 million for the implementation. Additional money would be allocated,
though, for the yearly maintenance costs. Thus, the project team decided to
focus the first phase of the project on deploying the radio LAN in three of the nine
warehouses and implement only the receiving and inventory warehouse functions. In
addition, the team would install the wireless LAN in the office areas. The team would
propose implementing the other functions, such as picking and shipping, at the
beginning of the next year.