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The ElectroShock is a retailer of electronics such as cell phones, satellite radios, mp3 players, and highend LCD and plasma TVs.

The ElectroShock is a retailer of electronics such as cell phones, satellite radios, mp3 players, and high‐end LCD and plasma TVs. The ElectroShock is a large chain with stores in strip shopping centers throughout the United States. However, each store is small, with generally 5‐6 employees and a manager. Each store sells much less volume than a large electronics retailer such as Best Buy or Circuit City.

Top management has recently become concerned with what appears to be an excessive amount of inventory loss (shrinkage) at many of its stores. At this point, the management team is uncertain whether the excessive loss is due to weaknesses in its IT system that tracks inventory or to customer and employee theft at the stores. Top managers are concerned that the IT system may be a contributing factor to the loss and would like to study whether a new system should be implemented. Through their industry contacts, they know that large retailers such as Best Buy and Circuit City use much more sophisticated inventory management systems than The ElectroShock does.

A systems analysis would require a cost-benefit analysis and a feasibility study. Describe steps that The ElectroShock should take to complete cost-benefit analysis and a feasibility study for a new IT system to track inventory.

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