Reference no: EM13368861

Choosing the economical alternative

Computers Inc is looking into three possible Customer Call Center services setups in different countries. The projected cost structure is as below:

Project Name Customer Call Center service in China Customer Call Center service in India Customer Call Center service in US
Cost of Machinery $4,650,000 $ 4,630,000 $ 4,800,000
Training Costs $150,000 $ 120,000 -
Per customer revenue $ 45 $ 45 $ 45
Per customer Variable cost of support $ 21 $ 20 $ 22

The capacity of any of these call centers is 400,000 customers services per year. You are hired to analyze the projects and help select the project that takes the least time to break even. In the process of analyzing the projects also calculate the following:

a. BEP revenue. Decide which option should be selected using the BEP revenue model (decision based on total revenue).

b. BEP Quantity (customer numbers) for all the three proposals. Which project should be selected based on BEP Quantity.

c. Number of years to reach BEP for each project. Decide which project should be selected using the BEP years as standard.

d. If the company needs to support 260,000 customers every year, then which plan should be selected?