utilities Northeast (NEU) is in the business of generating and distributing electricity to the
customers in various North-eastern states in the USA. In order to address various issues related
to customer service, NEU operates a full-fledge call center. To provide better training to its
customer representatives, NEU records the chat of each customer call and use it extensively to
analyze various customer service related issues. Currently, NEU employs eight such call
analyzers. The salary of each of these analyzers is $50,000 and historical trends show that on and
average each analyzer gets 4% salary raise every year.
Developments in the data mining technologies have made it possible to use speech mining in
order to analyze customer calls. NEU is planning to purchase such automated call analysis tool
Callminer from CallMining Inc. The cost of is Callminer $800000 and annual maintenance cost
for Callminer is $150000. If NEY deploys Callminer, it will need only one human call analyzer
who will have $50000 annual salary with an average raise of 4% per year. Does it make sense to
buy Callminer? If so, how long is the payback period for Callminer?
Here we want to compare two strategies. The one with lower cumulative cost is the better one.
Cumulative cost is influenced by how many years the software could be used. For example, if we
expect that the software can be used for 3 years, then cumulative cost is the sum of the costs
incurred in the first three years.
Build an Excel model to answer this specific what-if question:
If the software can be used for n (n=1,2,3,10) years, which strategy is better?
We want to see how the decision is changed as n is changing (n=1, 2, 3, , 9, 10)