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# hw2 solution - BUAD 311 Homework 2: Capacity Analysis 1. A...

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BUAD 311 Homework 2: Capacity Analysis 1. A call center employs 1000 agents. Each month, 125 agents leave the company and 125 new agents are hired. a. (10 points) How long, on average, does an agent work for this call center? 8 months The cost of hiring and training a new agent is \$2,500. The manager of this call center be- lieves that increasing each agent’s salary would keep them working longer in the company. The manager wants to increase the average employment time of an agent to 20 months. b. (10 points) If, on average, an agent were to stay employed for 20 months, by how much would the hiring and training costs decrease? Answer: Currently, the annual hiring and training cost is (125 × 12) × \$2,500 = \$3,750,000. If an agent were to stay employed for 20 months then there will be Throughput Rate = WIP Throughput Time = 1000 agents 20 months = 50 agents/month leaving the company and 50 agents/month hired and the annual hiring and training cost would be (50 × 12) × \$2,500 = \$1,500,000, or a reduction of \$2,250,000 . 2. The Los Angeles branch of Hit & Come Insurance Co. processes 30,000 claims a year. The average processing and waiting time is 3 weeks. Assume there are 50 work-weeks per year. a.

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## This note was uploaded on 05/11/2008 for the course BUAD 311 taught by Professor Vaitsos during the Spring '07 term at USC.

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hw2 solution - BUAD 311 Homework 2: Capacity Analysis 1. A...

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