Based on the data below, compute the cost per case and select the best method of increasing customer service capacity based on cost per case.
Understand the Problem
The question is asking to calculate the cost per case of three different actions to be taken to increase customer service capacity and then determine which method is the best based on the calculated cost per call.
Answer
The best method is to add temporary staff during peak hours, with a cost per call of $12.
Answer for screen readers
The best method of increasing customer service capacity based on cost per case is to add temporary staff during peak hours, with a cost per call of $12.
Steps to Solve
- Identify the formula for cost per added call
We need to calculate the cost per call using the formula:
$$ \text{Cost Per Call} = \frac{\text{Annual Cost}}{\text{Added Calls}} $$
- Calculate cost per call for each action
- Purchase new phone system:
Annual Cost = 6000, Added Calls = 300
$$ \text{Cost Per Call} = \frac{6000}{300} = 20 $$
- Add temporary staff during peak hours:
Annual Cost = 36000, Added Calls = 3000
$$ \text{Cost Per Call} = \frac{36000}{3000} = 12 $$
- Modify software for efficiency:
Annual Cost = 24000, Added Calls = 1000
$$ \text{Cost Per Call} = \frac{24000}{1000} = 24 $$
- Compare the cost per call for each action
Now we will summarize the cost per call calculations:
- Purchase new phone system: $20
- Add temporary staff during peak hours: $12
- Modify software for efficiency: $24
- Select the best method
The method with the lowest cost per call is the best option. In this case, adding temporary staff during peak hours ($12) is the best method to increase customer service capacity.
The best method of increasing customer service capacity based on cost per case is to add temporary staff during peak hours, with a cost per call of $12.
More Information
Selecting the method with the lowest cost per call ensures that resources are used efficiently while maximizing service capacity. This approach helps in making strategic decisions that can lead to better financial outcomes.
Tips
- Not using the correct formula: Ensure that you follow the correct formula for calculating cost per call.
- Forgetting to compare results: Always compare the calculated costs to determine the best option.
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