Question

A property title search firm is contemplating using online software to increase its search productivity. Currently an average of 63 minutes is needed to do a title search. The researcher cost is $2.00 per minute. Clients are charged a fee of $460. Company A’s software would reduce the average search time by 18 minutes, at a cost of $4.00 per search. Company B’s software would reduce the average search time by 23 minutes at a cost of $6.00 per search.

a. Calculate the productivity in terms of revenue per dollar of input

Productivity (Revenue per Dollar Input) Approach Current Company A Company B

b. Which option would have the highest productivity in terms of revenue per dollar of input?

Answer 1

Requirement-(a): Current Company-A Company-B Minutes needed for title search 63 45 40[63 minutes: (63-18) Minutes: (63-23) Minutes] Researcher cost per minute $2.00 $2.00 $2.00 $126.00 $90.00 $80.00 [63 x $2.00: $45 x $2.00: 40 x $2.00] Add: Additional cost per search$0.00 $ 4.00 $ 6.00 Total researcher cost per search $126.00 $ 94.00 $86.00 Fee charged to client per search $460.00 $ 460.00 $460.00 Productivity (Revenue per $ input) 3.65 4.89 5.35 Requirement-(b): Option-(b): Company-B Reason: Productivity (Revenue per dollar of input) for Compan-B is 5.35 which is the highest among the three.