a) Using ABC analysis, and the information in Exhibits 2 and 4, calculate the loss per household for the six customer profiles per Exhibit 4. Round your calculations to the nearest dollar. b) What are two specific management actions for each of the six customer profiles that would substantially improve the profitability? Calculate the impact of these actions to the nearest dollar. (Please show how you derived the answers)

EXIBIT 2 Unit Cost Calculations (2000 estimate) $000 Driver Driver Units Cost/Unit Processes Interactions Branches $65,200 Weighted "Interactions" 875,000 $ 74.51 Telephones (Call Center) Rep Assisted Automated $ 574,200 $ 56,200 Calls Calls 54,200,000 74,100,000 $ 10.59 $ .76 On Line Visits $ 101,600 $ 14,400 Visits Quotes 78,133,000 718,200,000 $ $ 1.29 02 Quotes only Back Office Set-up New Accounts Account Maintenance Transactions Processing $ 48,000 $ 253,200 $ 200,100 New Accts. Accounts Weighted Transactions" (Trades, etc.) 2,424,000 10,300,000 18,475,000 $ 19.80 $ 24.56 $ 10.83 Marketing Development & Retention Acquisition $ 116,400 $ 216,300 % of Revenue New Households $2.173 billion 600,000 5% $361. Total $1,645,600 EXHIBIT 4 Profiles of Selected Tenth Deile Households (2000 estimates) AT (60-200) Retiree (100-500) YP Core Boomer The "Average" Customer .23 1 1 Ta 14 HNW 2M+ 5M-2M 4 12 120 200 180 300 70 200 5,400 37,600 196 6 1 5 100 + 2200 + 97 629 221 26,000 75 4 34 +317 43 80 73 298 317 115 2,732 24,355 12 22 19.1 20.1 185.1 4.8 2.66 27 16 Branch Visits Rep-Assisted Calls Automated Calls On Line Visits On Line Quotes Transactions" Number of Accounts Assets (000) Mutual Funds Investment Securities Revenue per Household Mutual Fund Fees Brokerage Fees Revenue-Average Basis Points Mutual Fund Fees Brokerage Fees T 74 91 460 3,282 T 5 46 378T 27 116 13 32 3526 114 1,381 1,415 I 1,404 1,586 1921 335 120 I 275 420I 269 1,452 155 240 45 131 30 4 26 42 71 125 92 79 L 103 *Including trades for which AIMS charged an average of $30. (through a broker) or $16. (on-line). It should be clear that many transactions are not trades and thus are not revenue producing (name changes, address changes, dividend payments, or stock splits, for example). EXIBIT 2 Unit Cost Calculations (2000 estimate) $000 Driver Driver Units Cost/Unit Processes Interactions Branches $65,200 Weighted "Interactions" 875,000 $ 74.51 Telephones (Call Center) Rep Assisted Automated $ 574,200 $ 56,200 Calls Calls 54,200,000 74,100,000 $ 10.59 $ .76 On Line Visits $ 101,600 $ 14,400 Visits Quotes 78,133,000 718,200,000 $ $ 1.29 02 Quotes only Back Office Set-up New Accounts Account Maintenance Transactions Processing $ 48,000 $ 253,200 $ 200,100 New Accts. Accounts Weighted Transactions" (Trades, etc.) 2,424,000 10,300,000 18,475,000 $ 19.80 $ 24.56 $ 10.83 Marketing Development & Retention Acquisition $ 116,400 $ 216,300 % of Revenue New Households $2.173 billion 600,000 5% $361. Total $1,645,600 EXHIBIT 4 Profiles of Selected Tenth Deile Households (2000 estimates) AT (60-200) Retiree (100-500) YP Core Boomer The "Average" Customer .23 1 1 Ta 14 HNW 2M+ 5M-2M 4 12 120 200 180 300 70 200 5,400 37,600 196 6 1 5 100 + 2200 + 97 629 221 26,000 75 4 34 +317 43 80 73 298 317 115 2,732 24,355 12 22 19.1 20.1 185.1 4.8 2.66 27 16 Branch Visits Rep-Assisted Calls Automated Calls On Line Visits On Line Quotes Transactions" Number of Accounts Assets (000) Mutual Funds Investment Securities Revenue per Household Mutual Fund Fees Brokerage Fees Revenue-Average Basis Points Mutual Fund Fees Brokerage Fees T 74 91 460 3,282 T 5 46 378T 27 116 13 32 3526 114 1,381 1,415 I 1,404 1,586 1921 335 120 I 275 420I 269 1,452 155 240 45 131 30 4 26 42 71 125 92 79 L 103 *Including trades for which AIMS charged an average of $30. (through a broker) or $16. (on-line). It should be clear that many transactions are not trades and thus are not revenue producing (name changes, address changes, dividend payments, or stock splits, for example)