3. Incremental Method Exercise 3 Total Sales 14,000 27,000 38,000 48,000 55,000 58,000 # of Salesperson 1 2 3 5 6 Total Selling Cost 4,000 8,000 12,500 17,000 21,000 27,000 Step 1: Classify customers into categories Class A: Large 200 accounts Class B: Medium 350 accounts Class C: Small (but still attractive) 480 accounts 1,030 accounts total Step 2: Determine frequency and length of sales call required per account in each category Class A: 26 times/yr * 60 mins/call = 1,560 mins (26 hrs) Class B: 12 times/yr * 30 mins/call = 360 mins (6 hrs) Class C: 6 times/yr * 20 mins/call = 120 mins (2 hrs) Step 3: Calculate workload to cover entire market Class A: 200 accts* 1,560 mins/acct = 5,200 hrs Class B: 350 accts 360 mins/acct = 2,100 hrs 120 mins/acct = 960 hrs Class C: 480 accts * Total = 8,260 hrs Step 4: Determine time available per salesperson 40 hrs/wk* 48 wks/yr = 1,920 hrs/yr 4. workload Step 5: Apportion salesperson's time by task performed Selling 40% = 768 hrs/yr (1,920*40%) Nonselling 30% = 576 hrs/yr (1,920*30%) 30% = 576 hrs/yr (1,920*30%) Traveling 100% = 1,920 hrs/yr Step 6: Calculate the number of salesperson needed 8,260 hrs/768 hrs per salesperson = 10.75 How many sales people 10 or 11? Step 6: Calculate the number of salesperson needed 8,260 hrs/768 hrs per salesperson = 10.75 => 11 persons 10p x 768hr = 7,680hr 8,260hr