Question

This assignment is for my management information systems class and I don't know which category I should post it to. I will appreciate if anyone can help me with this assignment, all the information required for this assignment to be completed I am sharing it in this post. Thank you in advance! Also, I have posted it in computer science and I did not get any help from them too...

А В C Е G H K М 1 NE Utilities Employee Option 2 Automation 3 Employees 4 Salary 5 Raise # Employees 8 1 $50,000 $50,000 Salary 4% 4% Raise МС Cost $800,000 $150,000 МС Cost $50,000 $950,000 | $1,000,000 $52,000 $150,000 $54,080 $150,000 $56,243 $150,000 $58,493 $150,000 7 Maint.Cost 8 Year Emp Cost 1 $400,000 2 $416,000 3 $432,640 $1,248,640 4 $449,946 $1,698,586 Cum. Cost Emp Cost TC Cum.Cost $400,000 $816,000 $1,000,000 $1,202,000 $1,406,080 $1,612,323 9 $202,000 $204,080 $206,243 10 11 12 5 $467,943$2,166,529 $208,493 $1,820,816 13 14 15 Please, observe after four years, the cummulative cost of the Automation option is less than that of the employee option ($1698586)

Automated Call-Analyzers at Northeast Utilities Objectives:

Northeast Utilities (NEU) is in the business of generating and distributing electricity to the customers in various North-eastern states in the USA. To address various issues related to customer service, NEU operates a full-fledged call center. To provide better training to its customer representatives, NEU records the chat of each customer call and use it extensively to analyze various customer service-related issues. Currently, NEU employs eight such call analyzers. The salary of each of these analyzers is $50,000, and historical trends show that on an average each analyzer gets 4% salary raise every year.

Developments in data mining technologies have made it possible to use speech mining to analyze customer calls. NEU is planning to purchase such automated call analysis tool – Callminer from CallMining Inc. The cost of Callminer is $800000, and annual maintenance cost for Callminer is $150000. If NEY deploys Callminer, it will need only one human call analyzer who will have $50000 annual salary with an average raise of 4% per year. Determine the payback period for CallMiner.

Guidelines: Payback period is the time it takes to recoup the investment in CallMiner. To determine this, you have to compare the cumulative costs of both the options over the next few years (let’s say seven years). The payback period is determined by the time when the cumulative costs of having CallMiner drops below the cumulative costs of having the other option. While doing this, do not forget our basic rule. First, enter all input numbers with their headings and subsequently, use these input numbers to build formulas using cell referencing.

Answer 1

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Employee Option				Automation
Employee	8			Employee	1
Salary	50000			Salary	50000
Raise	4%			Raise	4%
				MC Cost	800000
				Maint.Cost	150000

Year	Employee Cost	Cum.Cost		Employee Cost	Cum.Cost	Total Cost	Cum.Cost	Saving on account of use of CallMiner	Total Recovery till 6 years	Amount to be recovered (MC Cost)	Difference to be recoved in 7th Year	Proportionate period	Payback Period (In Years)
1	400000	400000		50000	950000	1,000,000	1,000,000	600,000	89,923	800000	710,077	0.7765	7.78
2	416000	816000		52000	150000	202,000	1,202,000	386,000
3	432640	1248640		54080	150000	204,080	1,406,080	157,440
4	449946	1698586		56243	150000	206,243	1,612,323	(86,262)
5	467943	2166529		58493	150000	208,493	1,820,816	(345,713)
6	486661	2653190		60833	150000	210,833	2,031,649	(621,541)
7	506128	3159318		63266	150000	213,266	2,244,915	(914,403)