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Case 7: The Health Care Coverage Decision at Big Dog Collars
7
THE HEALTH CARE COVERAGE
DECISION AT BIG DOG COLLARS
CASE
Decision Support Using Excel
PREVIEW
Your dog collar business is doing well. You are considering adding health care coverage as an employee
benefit. However, this coverage would be expensive, and other costs are expected to rise in the future. In this
case, you will use Excel to see if the business will be profitable enough to allow adding employee health
coverage.
PREPARATION
￿
Review spreadsheet concepts discussed in class and in your textbook.
￿
Complete any exercises that your instructor assigns.
￿
Complete any part of Tutorial C that your instructor assigns. You may need to review the use of
IF statements and the section called
Cash Flow Calculations: Borrowing and Repayments.
￿
Review file-saving procedures for Windows programs.
￿
Refer to Tutorial E as necessary.
BACKGROUND
Your business is called Big Dog Collars. You make high-end dog collars and sell them directly to dog owners
via the Internet.
You might think that dog owners would be happy to have a single collar for their pets, but you would be
mistaken. Today
s dog can have a collar for each season. The fall collar might feature a pattern of turning
leaves. The winter collar might show a jolly Frosty the Snowman. Furthermore, owners can buy collars for
special days, such as a July 4 th collar that features the American flag. The marketing possibilities are almost
endless.
Your dog collars have two parts. The strap that goes around the dog
s neck is made from an attractive,
durable fabric. The ends of the strap fit into a two-part plastic snap that secures the collar.
You buy the strap fabric and snaps from different suppliers. The strap fabric comes in a flat sheet that
must be cut, folded, stitched, and ironed by one of your assembly workers. The snap has a male part and a
female part. One end of the strap is fastened to the male part of the snap, and the other end is fastened to
the female part.
The assembly process sounds simple, but it is exacting work. The cutting, folding, and stitching must be
precise. The strap ends must be inserted into the snaps without crinkling the fabric. You have four good
manufacturing workers whom you pay well so that they stay with your company. Each worker can make 20
collars per day, and they work 250 days per year.
It is amazing how many products contain petroleum as a raw material, and the collar parts are no
exception. Oil is refined into compounds that become feedstocks in the manufacture of many products, including
plastics and synthetic fibers.
 
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