Suppose that in addition to the call center engagement outlined earlier, MMI also provides the following annual service to 10 other clients:

Required

1. What is the level of idle capacity at MMI, not assuming that AS becomes a customer? What are the implications for the operating and marketing strategies at MMI?

2. Assume that AS comes back to MMI with a revised proposal. The revised proposal includes call center activity as described in Problem 5-46, but in addition, AS wants MMI to provide error-checking services for those who apply for loans at AS. MMI would use some of the call center staff, after appropriate training, to complete the processing of the credit checks. AS expects the following service to be needed:

What would be the idle capacity with the revised proposal? What would be the cost of the idle capacity?

Transcribed Image Text:

Average Number of Minutes/Call Total Calls Answered Platinum Regional Bank 234,000 66,788 6.0 Healthwise Software Inc. 5.0 Johnson Manufacturing Lesco Online Shopping 122,665 233,756 55,455 4.0 6.0 Babcock Insurance Service 5.5 Garcia Electric Supply and Service Gilbert's Online Garden Supplies Financial Planning Services Inc. Porter's Camera and Optical 38,956 145,902 68,993 198,440 3.4 4.5 11.0 5.5 Jordan Auto World Inc. 965,887 3.5