A national call-centre is trying to decide how to best invest in upgrad- ing their internet...
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A national call-centre is trying to decide how to best invest in upgrad- ing their internet infrastructure at a cost of $2 million dollars. With the current infrastructure there is a 10% chance of latency and discon- nections mid-consultation while using the WiFi connection during the year. Latency and lost connections ultimately result in an annual loss of $3 million revenue to the business due to decreased productivity. On the other hand, with the relevant upgrades, the probability of such outages each year reduces to 2%. In either case the business pays for the upgrades through an increase in costs to the consumer in the first year. Additionally, if the upgrades are performed and no outages oc- cur in a given year then revenue will increase by $1 million as a result of increased productivity and consumer confidence in the business. (a) Construct a table showing the call-centre's options and possible outcomes after one year. (b) In the short term (one year) is it better for the business to invest or not invest in upgrading the power infrastructure? (c) What about over five years? A national call-centre is trying to decide how to best invest in upgrad- ing their internet infrastructure at a cost of $2 million dollars. With the current infrastructure there is a 10% chance of latency and discon- nections mid-consultation while using the WiFi connection during the year. Latency and lost connections ultimately result in an annual loss of $3 million revenue to the business due to decreased productivity. On the other hand, with the relevant upgrades, the probability of such outages each year reduces to 2%. In either case the business pays for the upgrades through an increase in costs to the consumer in the first year. Additionally, if the upgrades are performed and no outages oc- cur in a given year then revenue will increase by $1 million as a result of increased productivity and consumer confidence in the business. (a) Construct a table showing the call-centre's options and possible outcomes after one year. (b) In the short term (one year) is it better for the business to invest or not invest in upgrading the power infrastructure? (c) What about over five years?
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Cost Benefit Analysis Concepts and Practice
ISBN: 978-0137002696
4th edition
Authors: Anthony Boardman, David Greenberg, Aidan Vining, David Weimer
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