Ringold’s Pool and Patio Supply John Ringold, Jr., just graduated from a local university with a degree in industrial management and joined his father’s company as executive vice president of operations. Dad wants to break John in slowly and has decided to see how he can do on a project that John Sr. has never had time to investigate. Twenty percent of the company’s sales are derived from the sale of aboveground swimming pool kits. Ringold’s does not install the pools. John Sr. has asked John Jr. to determine whether or not they should get into that business. John
Incidents for Discussion
Ringold’s Pool and Patio Supply
John Ringold, Jr., just graduated from a local university with a degree in industrial management
and joined his father’s company as executive vice president of operations. Dad wants to break
John in slowly and has decided to see how he can do on a project that John Sr. has never had
time to investigate. Twenty percent of the company’s sales are derived from the sale of aboveground swimming pool kits. Ringold’s does not install the pools. John Sr. has asked John Jr. to
determine whether or not they should get into that business. John Jr. has decided that the
easiest way to impress Dad and get the project done is personally to estimate the cost to the
company of setting up a pool and then call some competitors and see how much they charge.
That will show whether or not it is profitable.
John Jr. remembered a method called the work breakdown structure (WBS) that he thought
might serve as a useful tool to estimate costs. Also, the use of such a tool could be passed along
to the site supervisor to help evaluate the performance of work crews. John Jr.’s WBS is shown
in Table A. The total cost John Jr. calculated was $185.00, based on 12.33 labor-hours at
$15.00/labor-hour. John Jr. found that, on average, Ringold’s competitors charged $229.00 to
install a similar pool. John Jr. thought he had a winner. He called his father and made an appointment to present his findings the next morning. Since he had never assembled a pool himself, he decided to increase the budget by 10 percent, “just in case.”
What aspects of the decision will John Sr. consider?
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