Management Science Case Study

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Case Study: Cable & Moore

 

 

 

With the company expanding into several new markets in the coming months, Cable & Moore was anticipating a large increase in sales revenue.  The future looked bright for this provider of television, telephone, and Internet services.  However, management of Cable & Moore was well aware of the importance of customer service in new markets.  If the public had problems with new service and could not quickly and efficiently have their problems solved, demand would quickly erode and it might take years to recover from the bad publicity.  Therefore, management was adamant that there would be enough well-trained customer service representatives to handle the calls from new customers and from potential customers.

 

 

 

Based on experience in other markets, the anticipated number of phone calls to customer service was projected.  Given the average call-length, the number of hours of customer-service time from April to August was projected and is shown below.

 

 

 

Month                   April          May           June           July            August

 

Hours needed        22,600       24,600       27,200       28,100       29,500

 

 

 

Through experience, management knew that training a new employee well was essential.  Each new employee was put through a 1-month training program, and was assigned to an existing employee for an entire month.  Normally an existing employee would work 160 hours per month.  However, when an employee was assigned to perform training of a new-hire, the productive work hours for that employee dropped to 80 hours per month.

 

 

 

During the training period, the trainee was paid $2,000 for the month.  At the end of that time, the monthly salary increases to the standard salary for a regular customer service representative which is $3,500 per month.  In the past, the company lost about 5% of the trained customer service representatives per month due to attrition.  While the company is looking to improve upon this, for the next several months it is anticipated that this will continue.  There will be 170 trained employees at the beginning of April.  Management of the company would like to develop a schedule of hiring new employees so that there are sufficient customer service representatives to meet the demand, but this is to be done at the lowest possible cost.

 

 

 

Discussion Questions

 

 

 

1.      Develop a schedule for hiring new employees.  What is the total cost of this schedule?

 

2.      Discuss any limitations that exist for this solution.

 

3.      How would the schedule change if the attrition rate could be lowered to 3% per month instead of 5%?  What would be the impact on the cost?

 

 

 

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