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lists the number of employees in each call center and whether the call center has a labor union. Associates are paid $15 per hour and

lists the number of employees in each call center and whether the call center has a labor union. Associates are paid $15 per hour and work 160 hours per month.

All associates have indirect costs associated with computing, software, training, and office space. The average of those indirect costs is $1,000 per employee per year.

Horizon considers purchasing an AI system that would answer all incoming calls from customers. The system is able to resolve simple issues (e.g. frequently asked questions or billing information). It is also able to sort more complicated requests (e.g. service change) and direct them to associates who will further interact with the customers.

It is expected that the AI system would significantly streamline the business processes in the call centers, especially the bigger ones. However, the system can only be implemented in call centers that have no labor union. In the call centers where the AI system can be implemented, the following reductions in the workforce of each call center are expected:

Total number of employees in call center

Reduction in total employees

0-100

10%

101-200

19%

201-400

26%

401-600

31%

601-800

33%

801-1000

34%

a) Compute the total cost (salaries and indirect costs) of each call center per year and for all call centers per year, without the AI system (i.e. todays cost).

b) Compute the total cost (salaries and indirect costs) of each call center per year and for all call centers per year, with the AI system (where it can be implemented).

c) It is worth implementing the AI system if the reduction in total cost, i.e. (a) minus (b) for all call centers, is greater than the cost of the AI system over its lifetime. If an AI system is considered worth implementing and its lifetime is 3 years, what is its maximum cost?

Excel functions you may want to use: IF, AND, Vlookup

Call center Total number of employees call center has union?
Redmond 829 NO
Indianapolis 802 NO
Chicago 529 NO
Detroit 223 YES
St. Louis 216 NO
Iowa City 522 NO
Lincoln 781 NO
Gary 643 NO
Bloomington 386 YES
Fort Wayne 790 YES
Fond Du Lac 100 NO
Wichita 929 YES
Aurora 407 NO
Minneapolis 206 NO
Chicago 150 NO
La Crosse 853 YES
Peoria 292 NO
Springfield 78 NO
Green Bay 532 YES
Madison 732 NO
TOTAL 10000

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