Practical Work 2: Business Case Analysis | Computer Vision for Business

Objectives

By the end of this practical work, you will be able to:

Apply the opportunity assessment framework to evaluate CV use cases
Calculate ROI for a computer vision project
Identify and quantify costs and benefits
Make a data-driven recommendation on project viability
Present findings in a structured business case format

Prerequisites

Understanding of CV applications from Session 2
Basic spreadsheet skills (Excel, Google Sheets)
Familiarity with business metrics and financial concepts

Scenario

You are a consultant for RetailMax, a mid-sized retail chain with 50 stores. The operations director has asked you to evaluate implementing a computer vision system for automated inventory counting. Currently, staff manually count inventory weekly, which is time-consuming and error-prone.

Current Situation	Details
Stores	50 locations
Weekly inventory count	4 hours per store
Staff hourly rate	$18/hour
Current accuracy	~92% (manual errors)
Shrinkage (theft + errors)	2.5% of inventory value
Annual inventory value	$50M across all stores

Instructions

Step 1: Apply the Opportunity Assessment Framework

Answer each question in the framework to determine if this is a good CV candidate:

Question	Your Answer	Justification
Is the task visually based?	[Yes/No]	[Your reasoning]
Can a human do it by looking?	[Yes/No]	[Your reasoning]
Is it repetitive and high-volume?	[Yes/No]	[Your reasoning]
Are there clear success criteria?	[Yes/No]	[Your reasoning]

Step 2: Calculate Current Costs

Quantify the existing manual process costs:

Weekly labor hours = [stores] × [hours per store]
Weekly labor hours = ___ × ___ = ___ hours

Annual labor hours = Weekly hours × 52
Annual labor hours = ___ × 52 = ___ hours

Annual labor cost = Annual hours × hourly rate
Annual labor cost = ___ × $18 = $_______

Annual shrinkage cost = Inventory value × shrinkage rate
Annual shrinkage cost = $50,000,000 × 0.025 = $_______

Step 3: Estimate CV Solution Costs

Use these vendor estimates to calculate implementation costs:

Cost Category	Estimate
Camera hardware (per store)	$2,500
Edge computing device (per store)	$1,200
Installation (per store)	$800
Software license (annual, all stores)	$60,000
Integration & training (one-time)	$40,000
Maintenance (annual)	$25,000

Hardware per store = Camera + Edge device + Installation
Hardware per store = $_____ + $_____ + $_____ = $_____

Total hardware (50 stores) = $_____ × 50 = $_______

Year 1 total cost = Hardware + Software + Integration + Maintenance
Year 1 total cost = $_______ + $_______ + $_______ + $_______ = $_______

Annual ongoing cost (Year 2+) = Software + Maintenance
Annual ongoing cost = $_______ + $_______ = $_______

Step 4: Estimate Benefits

The CV system is expected to achieve:

Reduce counting time by 85% (from 4 hours to 36 minutes)
Improve accuracy to 98%
Reduce shrinkage by 30% through better detection

Labor savings calculation:
New weekly hours per store = 4 hours × (1 - 0.85) = ___ hours
Total weekly hours saved = (4 - ___) × 50 stores = ___ hours
Annual labor savings = ___ hours × 52 × $18 = $_______

Shrinkage reduction calculation:
Current shrinkage = $1,250,000
Reduction = $1,250,000 × 0.30 = $_______

Total annual benefit = Labor savings + Shrinkage reduction
Total annual benefit = $_______ + $_______ = $_______

Step 5: Calculate ROI

Compute the return on investment over 3 years:

Year 1:
  Costs: $_______
  Benefits: $_______
  Net: $_______

Year 2:
  Costs: $_______
  Benefits: $_______
  Net: $_______

Year 3:
  Costs: $_______
  Benefits: $_______
  Net: $_______

3-Year Total:
  Total Costs: $_______
  Total Benefits: $_______
  Net Benefit: $_______

ROI = (Total Benefits - Total Costs) / Total Costs × 100
ROI = ($_______ - $_______) / $_______ × 100 = ____%

Payback Period:
Year 1 Net = $_______
Cumulative after Year 1 = $_______
Cumulative after Year 2 = $_______
Payback occurs in Year ___

Step 6: Risk Assessment

Identify potential risks and mitigation strategies:

Risk	Impact (H/M/L)	Probability (H/M/L)	Mitigation
Lower than expected accuracy	[H/M/L]	[H/M/L]	[Your strategy]
Staff resistance to change	[H/M/L]	[H/M/L]	[Your strategy]
Technical integration issues	[H/M/L]	[H/M/L]	[Your strategy]
[Add your own risk]	[H/M/L]	[H/M/L]	[Your strategy]

Step 7: Prepare Your Recommendation

Write a one-page executive summary with the following structure:

Recommendation: Go / No-Go / Pilot first (with reasoning)
Financial Summary: Key numbers (investment, ROI, payback)
Key Benefits: Top 3 quantified benefits
Key Risks: Top 2 risks and mitigations
Next Steps: Recommended actions if approved

Expected Output

After completing this practical work, you should have:

Completed opportunity assessment framework
Detailed cost and benefit calculations
3-year ROI analysis with payback period
Risk assessment matrix
One-page executive summary with recommendation

Deliverables

Completed worksheet with all calculations (spreadsheet or document)
One-page executive summary (PDF or document)
Optional: 3-5 slide presentation of your recommendation

Bonus Challenges

Challenge 1: Create a sensitivity analysis - how does ROI change if accuracy is only 95% instead of 98%?
Challenge 2: Propose a phased rollout plan (pilot with 5 stores first) and recalculate the financials
Challenge 3: Research real CV inventory management solutions and compare their pricing to these estimates
Challenge 4: Identify 2 additional benefits not mentioned (e.g., real-time stock alerts) and estimate their value