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Question 4: Business Decision

Brightline Printing: a second shift or automation

  • Units 1 and 4
  • 8 points
  • About 40 minutes

You can use a calculator on this question, just like on exam day.

A long case about a business choosing between two options, with financial and nonfinancial details: you describe a factor affecting the business, compare the options using financial and nonfinancial criteria, and recommend one, backed by three criteria and evidence from the case. On the exam: Question 4 of 4, Section IIB (Questions 2–4 share 65 minutes); about 40 minutes including a 15-minute reading period, 15% of the score. Assesses Skill Category 3. Section II has 4 free-response questions in 90 minutes (40% of the score). The exam is fully digital in Bluebook, and only a 4-function calculator is allowed (handheld or the built-in Desmos 4-function calculator).

The question and its sources

You have been hired as a consultant to help the business described below choose between two courses of action. Read the whole scenario before you start writing. Respond to parts A, B, and C.

Background

Brightline Printing prints labels and packaging for food and drink companies. It was founded in 1985 and has 60 employees. One of its core values is 'We take care of our people,' and it has never laid off a worker.

Orders from craft beverage and specialty food companies have grown 30% in two years, and Brightline's presses are running at full capacity. Brightline takes an average of 7 days to fill an order; its main rivals take 4. Digital presses, which handle small custom orders quickly, are becoming the industry standard.

Local unemployment is 2.8%, rival printers have raised wages, and Brightline's last three job postings each took about two months to fill.

Brightline's managers have narrowed their choices to two courses of action. Brightline has $600,000 in cash available.

Source: Hypothetical scenario written for this practice question

Option 1: Second Shift

Brightline would add an evening shift, hiring and training 18 workers to run its current presses and a refurbished used press. No jobs would be cut. Average order time would stay about 7 days.

Source: Hypothetical scenario written for this practice question

Option 2: Digital Press

Brightline would buy a high-speed digital press with automated cutting. Average order time would fall to 3 days, and the press uses 30% less ink and wastes 30% less paper. It would replace 6 press operator positions. Brightline could retrain 3 of those operators as digital press technicians; the other 3 positions would be cut, with severance pay. In a recent survey, 70% of Brightline employees said they worried about job security if the company automated.

Source: Hypothetical scenario written for this practice question

Table 1. Projected financial effects of each option

ItemOption 1: Second ShiftOption 2: Digital Press
One-time cost$300,000$1,500,000
Added annual revenue$2,000,000$2,400,000
Added annual profit$120,000$450,000
Outside funding needed$0$900,000
Average days to fill an order73

Source: Hypothetical data written for this practice question

Suggested time: 40 minutes

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Part (A(i))

1 point

Businesses are shaped by internal factors, market factors and external factors. Describe one internal, market or external factor in the scenario that affects Brightline.

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Part (A(ii))

1 point

Explain how the factor you described in part A(i) creates an opportunity or a problem for Brightline.

0 / 2,500 characters

Part (B(i))

1 point

Compare the two courses of action using projected annual return on investment (ROI) as the criterion. Describe a difference or similarity between them, and include specific evidence related to each course of action.

0 / 2,500 characters

Part (B(ii))

1 point

Compare the two courses of action using one other financial criterion. Describe a difference or similarity between them, and include specific evidence related to each course of action.

0 / 2,500 characters

Part (B(iii))

1 point

Compare the two courses of action using one nonfinancial criterion. Describe a difference or similarity between them, and include specific evidence related to each course of action.

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Part (C)

3 points

Recommend a course of action for Brightline. In your response, do the following: recommend one of the two courses of action in the scenario; explain why you recommend it; and support your recommendation with any three specific criteria, financial or nonfinancial (they may include the criteria from part B), with evidence from the scenario for each criterion.

0 / 2,500 characters

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