This is a simple efficiency model for a service provider.
They work 8 hrs / day and 5 days per week.
Clients receive 45 minutes each of the provider's time
Gross revenue per client is $60
The service provider is compensated at 28% of revenue generated
The owner wishes to reduce slack to increase profitability.
However the provider will demand greater compensation when they are worked harder.
1. Decrease Slack by 0.25% per step, down to 7.0% HINT: To complete the table, do not copy the percentages from another cell for the rows and columns. Put them in manually, (e.g. 28%, 28.25%... for the rows, and 10%, 9.75%.... for the columns.
2. Increase provider comp by 0.25% per step, up to 30%
3. Indicate the negotiation area where the owner will maintain a similar contribution margin. HINT: You can highlight this indication and it will be equal to or below the contribution margin $2073.60-it will show a step-down within your table
4. Indicate a negotiation area where the owner may be able to strike an increase in contribution margin. HINT: You can highlight this indication in a different color and it will be contribution margin above $2073.60-it will show an additional step down from the similar contribution margin above 5. Format your Two way table so it is well labeled and easily readable. HINT: Make sure you have watched the video in the Module about Two-way tables and how to identify contribution margins.
Assumptions
Provider Hours / day	8
Working Days / wk	5
Client time in min	45
Billing per client	$60
Compensation Rate	28%
Slack	10%
Output
Contribution Margin	$ 2,073.60
Model
Max Clients /Wk	53.33
Slack	5.33
Number of Clients seen	48
Revenue	$ 2,880.00
Provider Cost	$ 806.40
Contribution Margin	$ 2,073.60