Case Name :      Precision Steel Fabrication: An Equipment Purchase Decision

Authors :           Nancy M. Levenburg, Brian Scalabrino

Source :             North American Case Research Association (NACRA)

Case ID :            NA0101

Discipline :        Operations Management

Case Length :    17 pages

Solution sample availability : YES

Plagiarism : NO (100% Original work)

For nearly 60 years, Precision Steel Fabrication (PSF) had been making fabricated steel components for the contract furniture (commercial office furniture) industry. At the time of the case, the $10 million firm was emerging from a downturn in sales and seeing its first sales increase in three years, and was contemplating the purchase of a $1 million tube laser. The tube laser could do the work of three machines: a table saw, a hydraulic press, and a deburring machine. Should PSF purchase a tube laser? If so, how should three vendors’ offerings be evaluated and what criteria are most salient? While the tube laser would greatly increase the firm’s manufacturing efficiency, the decision itself is relatively risky. The case is written to provide the framework for evaluating an equipment purchase decision within the context of business and operations strategy, and in a small business environment.