The police department of a major city needs a faster process to do criminal background checks.

They eliminated several vendors and their products because they required too much retraining and major changes in search process steps. The police department review committee thought many of these searches might not hold up in court due to process and verification changes. The two finalist required few changes in the non-online process.

Process A resulted in a fixed cost of $1,100,000 and a variable cost per search of $1.34. Process B required a fixed cost of $925,000 and a variable cost per search of $1.45.

a. What is the break-even quantity between these two processes?

b. If predicted demand for next year is one million searches, what process do you recommend?

What is the cost savings?