A
property title search firm is contemplating using online software to
increase its search productivity. Currently an average of 45 minutes is
needed to do a title search. The researcher cost is $1.8 per minute.
Clients are charged a fee of $600. Company A’s software would reduce the
average search time by 8 minutes, at a cost of $3.6 per search. Company
B’s software would reduce the average search time by 9 minutes at a
cost of $5.8 per search.
| a. |
Calculate the productivity in terms of revenue per dollar of input. (Round your intermediate calculations and final answers to 2 decimal places. Omit the "$" sign in your response.)
|
| Approach | Productivity per Dollar Input | |
| Current | $ | |
| Company A | $ | |
| Company B | $ | |
| | ||
| b. | Which option would have the highest productivity in terms of revenue per dollar of input? |
| Company A |
rev: 03_15_2012
Explanation:
| Approach | Average Time | Cost | Productivity per Dollar Input |
| Current | 45 | 45 × $1.8 = $81.00 | $600/$81.00 = $7.41 |
| Company A | 37 | 37 × $1.8 + $3.6 = $70.20 | $600/$70.20 = $8.55 |
| Company B | 36 | 36 × $1.8 + $5.8 = $70.60 | $600/$70.60 = $8.50 |
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