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Breakeven: Robotic device

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5) Background: You have developed a unique robotic device that will autonomously deliver groceries to people's house.
Facts:
• You are limiting your delivery service to 3 miles from store location.
• The cost to produce the delivery robot is $9,300 per robot with a 3 year lifecycle
• Market research indicates you will need 5 robots to meet demand and account for down time (repair, charging, etc)
• You expect to receive on average 75 orders per day
• The average ticket price per order is $74
• It cost on average including maintenance and electricity 15 cents per mile to operate the delivery robot
• Each order cost $8 in labor to pick the groceries and launch the robot
• Margin for groceries is 3%

Using break even analysis determine the minimum service fee per delivery you will have to charge for this service to insure you don't lose money. Make sure you state your assumptions and show your work. I'm interested in your thought process. Feel free to submit as an excel spreadsheet if that's easier.

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Solution Summary

The Excel file contains instructions on a break even analysis for the example on robotic devices.

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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