Geo and Sally’s Flower Shoppe began 10 years ago as a small local flower shop by

Question

Geo and Sally’s Flower Shoppe began 10 years ago as a small local flower shop by two friends who loved creating beautiful flower arrangements for a reasonable price. Over time, Geo and Sally’s customer base began to expand as local customers told friends and family members around the country about the wonderful arrangements Geo and Sally could create for a very reasonable price. Besides flower arrangements, customers were interested in purchasing the unique pots they used for the arrangements, floral and garden accessories, garden flowers, vegetable plants, bushes, and even smaller trees. In addition to family customers, the business has expanded to include several small and even a few larger businesses in the local area. Through all of the expansion, flower arrangements remain the mainstay and primary profit center for the business. Geo’s brother Sammy suggested Geo and Sally set up an Internet storefront to sell more flower arrangements, which they did last year. They now find themselves owners of an ever-expanding Internet business with a loyal local customer base at their shop in Denver, Colorado. The shop itself has grown from the initial 500 square foot modified living room of an old home Geo used to live in to a new 6,000 square foot facility the company moved into two years ago. It includes a 1000 square foot showroom where they can display a variety of unique flower arrangements and containers. Arrangements in the showroom that do not sell within three days must be replaced so only the best items are seen and purchased by the large walk-in customer base. Geo and Sally’s information and data storage needs have exceeded the capacity of the current system. Sammy told Geo that he and Sally need to hire a consulting group to help them to implement a modern database system for accounting, payroll, inventory control, and sales:

What are the projected cost of designing, implementing, and maintaining the system for the next five to seven years, including the appropriate cost categories and sub-costs.

Explanation / Answer

The project costing is given as follows:

1) For the designing of modern database system we required atleast $2000. It includes database designing based on the customer requirements.
2) For implementation puprose we required atleast $1500. Implementation includes the cost that required to run the system smothly in heavy traffic as well. For smooth transactions as well as for running the system 24x7 we need to increase the required cost to around $2500
3) Maintaining the system very important. So for maintance we can reserve the budget on the bases years by which we required to keep the system running. In our case we required to maintain a system atlest for 7 years. So if we take $1000 per year then we required atlest $7000

So taking 7 years in account the total projected cost would be

$2000 + $1500 + $7000 = $10500

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