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Lynsay Detz is examining customer-service costs in the southern region of Cable Products. Cable Products has more than 200 separate electrical products that are sold
Lynsay Detz is examining customer-service costs in the southern region of Cable Products. Cable Products has more than 200 separate electrical products that are sold with a 6-month guarantee of full repair or replacement with a new product. When a product is returned by a customer, a service report is prepared. This service report includes details of the problem and the time and cost of resolving the problem. Weekly data for the most recent 8-week period are as follows: Week Customer-Service Department Costs Number of Service Reports Week 1 $13,300 210 Week 2 20,300 280 Week 3 10,600 120 Week 4 18,900 375 Week 5 14,400 255 Week 6 22,500 460 Week 7 16,600 335 Week 8 21,300 340 1. Plot the relationship between customer-service costs and number of service reports. Is the relationship economically plausible? 2. Use the high-low method to compute the cost function, relating customer-service costs to the number of service reports. 3. What variables, in addition to number of service reports, might be cost drivers of weekly customer-service costs of Cable Products
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