Homework2_Capacity_Solutions

Homework2_Capacity_Solutions - 311 Operations Management...

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1 311 Operations Management Spring 2008 Homework # 2 – Capacity Management 1. (20 points; 10 points per part) A call center employs 1000 agents. Every month 125 employees leave the company and 125 new employees are hired. a. How long on average does an agent work for this call center? TT = WIP / TR = 1000 / 125 = 8 On average an employee works 8 months The cost of hiring and training a new agent is $2,500. The manager of this call center believes that increasing agents’ salary would keep them working longer term in the company. The manager wants to increase the average work time of an agent to 20 months. b. If an agent works on the average 20 months, how much does the hiring and training costs decrease? Current hiring and training cost per year = 125*12*2,500 = $3,750,000 TR = WIP / TT = 1000 / 20 = 50 If an agent work 20 months, there will be 50 new hires per month New hiring and training cost per year = $1,500,000 Reduction in hiring and training cost = 3,750,000 - 1,500,000 = $2,250,000 2. (20 points; 10 points per part) The Los Angeles branch of Hit&Come Insurance Company processes 30,000 claims a year. The average processing and waiting time is 3 weeks. Assume there are 50 weeks per year. a.
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Homework2_Capacity_Solutions - 311 Operations Management...

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