Problem Statement The primary conundrum that has to be resolved in the case would be whether Griffin should incorporate

the Microdermabrasion into her spas available services, considering her present financial situation as well as her recent shortage on cash. In addressing this problem, it is important to take note of her outstanding debts, specifically the unsettled $16000 tax liability that she has to the government, and the time constraint that compels Griffin to decide and implement her plans, should she formulate one, quickly. There are two auxiliary complications that relate to this initial problem of hers. The first is determining the microdermabrasion machine that would prove to be most profitable, as provided by four different suppliers, based on each of the alternatives return on investment, which is to be based on related cash flows. The second would be what additional elements and factors could she alter in order to generate the most cash inflow and reduce the possible risks that would arise from this particular investment, assuming that she does choose to pursue the service. Alternatives As stated in the case, the main problem is whether Body Benefits should engage in Microdermabrasion considering her financial complications and status. Given this circumstance, Griffin effectively has only two options, whether to actually include the service -- after all, if she does pursue the said investment, her spa would be the sole provider of the service, effectively making a monopoly of initial customers who would want to undergo the treatment in her vicinity, or not plan at all. Regarding her planned investment in treatment, Griffin is to select from four different suppliers namely, ST Peel, Lames, Inter Esthetics, and Crystal-Pepita, the latter three having similar features while ST Peel supposedly has other unique features in addition to the standard characteristics of a microdermabrasion machine. In our actual analysis, however, we limited Griffins choice into either ST Peel or Lames. The elimination was done because we project that if ever that at the end of our analysis, Lames is favored over the ST Peel, this conclusion would be sufficient enough in deducing the even higher favorability of the two other machines, considering that their acquisition prices are relatively lesser to that of Lames. Analysis The analysis would be focused and structured on the Return on Investment, which would serve as the main point of comparison among the alternative machines. We would first identify the relevant values that should be considered as part of the initial investment. Next, we would be formulating the net cash flows for each alternative, where the differential costs and revenues specifically involved in the integration of the service would be distinguished. Finally, we would calculate each machines resulting returns on investment, based on the revenues, costs and net investments that we have initially segregated.

Sensitivity Analysis For the sensitivity analysis, we are including two sets of scenarios that aim to actually project the profitability of the investment that Griffin is going to make while different variables are modified. The first would be the number of customers that the treatment would attract, given that since the initial estimate of Griffin could increase. There would be two cases for this, an optimistic case, which assumes 8 clients on 4 treatments, 8 clients on 6 treatments, and 6 clients on 10 treatments, and the estimated or base case, having 6 clients on 4 treatments, 6 clients on 8 treatments, and 4 clients on 10 treatments. The second set would involve the price of the treatment, which aims to anticipate the kind of treatment that clients would undergo. This set would have three cases: a face-only treatment for $125, a face and neck option for $175, and the average treatment being $150, assuming each of option would have half of Griffins total annual clients.