Question
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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