At the beginning of month 1, GE Capital has 50 million accounts. Of these, 40 million are paid up (0-

due), 4 million are 1 month overdue (1-due), 4 million are 2 months overdue (2-due), and 2 million are 3 months overdue (3-due). After an account is more than 3 months overdue, it’s written off as a bad debt.

For each overdue account, GE Capital can either phone the cardholder, send a letter, or do nothing.

A letter requires an average of 0.05 hour of labor, whereas a phone call requires an average of 0.10 hour of labor. Each month 500,000 hours of labor are available. We assume that the average amount of a monthly payment is $30. Thus, if a 2-due account remains 2-due, it means that 1 month’s payment

($30) has been received, and if a 2-due account becomes 0-due, it means that 3 months’ payments

($90) have been received. On the basis of thousands of accounts, DMMs (Delinquency Movement Matrices) shown in the file P04_127.xlsx have been estimated. For example, the top-left 0.60 entry in the first table means that 60% of all 1-due accounts that receive a letter become 0-due by the next month. The 0.10 and 0.30 values in this same row mean that 10%

of all 1-due accounts remain 1-due after receiving a letter, and 30% of all 1-due accounts become 2-due after receiving a letter. Your goal is to determine how to allocate your workforce over the next 4 months to maximize the expected collection revenue received during that time. (Note: 0-due accounts are never contacted, which accounts for the lack of 0-due rows in the first two tables.)