The Management at Highly Technical Services (HTS) Wants to Develop

question 43

Essay

The management at Highly Technical Services (HTS) wants to develop a model that will help allocate technicians' time between service calls to government contract customers, private industry contract customers, and new customers. A maximum of 80 hours of technician time is available over the 2-week planning period. To satisfy cash-flow requirements, at least $1000 in revenue (per technician) must be generated during the 2-week period. Technician time for government customers generates $40 per hour, while time for private industry customers generates $30 per hour, and technician time for new customers only generates an average of $5 per hour because in many cases a new customer contact does not provide billable services. To ensure that the new customer contacts are being maintained, the number of new customer contacts must be at least 45% of the government and private industry contract contacts. For the revenue and policy requirements stated, HTS would like to determine how to allocate technician time between regular customers and new customers in order to maximize the total number of customers contacted during the 2-week period. Technicians require an average of 45 minutes for each contract contact and 1 hour for each new customer contact. Develop a linear programming model that will enable HTS to optimally allocate technician time between regular customers and new customers.

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Definitions:

Vertical Analysis

A method of financial statement analysis in which each entry for each of the three major categories of accounts (assets, liabilities, and equities) in a balance sheet is represented as a proportion of the total account.

Sales Revenues

Income received from selling goods or services over a period of time.

Net Sales

The amount of sales generated by a company after deducting returns, allowances for damaged or missing goods, and discounts.

Current Ratio

A liquidity ratio that measures a company's ability to cover its short-term obligations with its short-term assets.