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Automatic merchandising and the University of British Columbia

University of British Columbia

The purpose of this study is to investigate the economic feasibility of the financing, controlling and administering of the vending services on the University of British Columbia campus by the University Food Services Department. To do this, sales are projected for a period of five years (a year being an academic term from September 1st to August 31st), based on data collected on past vending sales and based on the projection of student enrollment made by the U.B.C. Department of Academic Planning. Sales were estimated in physical units to minimize the effect of inflation and price increases. Two estimates were made (a high and a low estimate) based on the Department of Academic Planning's high and low estimates of student enrollment. Only major vending products were considered - cigarettes, cold drinks, hot drinks and candy because they make up more than 99% of the total vending sales. Cost of goods sold, cash receipts, operating expenses and net profits are also projected on the same basis. After determining the capital outlay of the investment, the cash flows for the five year period (from September 1975 to August 1980) are determined and then discounted to present values using two discount rates - 10% and 10%%. These discounted incomes generated by the investment are then compared to discounted incomes generated by the continuation of the present system - that of receiving commissions from an outside vending firm. On a short term basis (that of five years), it is obvious that it is more profitable for the U.B.C. Food Services Department to stay with the present system. On a long term basis (over five years), this department would generate more income and retain greater control by administering the operation.

Text

2010-02-02

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http://hdl.handle.net/2429/19557

Business Administration

University of British Columbia

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