A property title search firm is contemplating using online software to increase its search productivity. Currently an average of 40 minutes is needed to do a title search. The researcher cost is $2 per minute. Clients are charged a fee of $400. Company A's software would reduce the average search time by 10 minutes, at a cost of $3.50 per search. Company B's software would reduce the average search time by 12 minutes at a cost of $3.60 per search. Which option would have the highest productivity in terms of revenue per dollar of input?
Answers
Answer:
If a property title search firm is contemplating using online software to increase its search productivity. The option that would have the highest productivity in terms of revenue per dollar of input is Company B.
The calculation for the productivity in terms of revenue per dollar input
Current
Total cost =40 minutes × $2 per minutes
Total cost= $80
Productivity =$400/$80
Productivity = $5
Company A
Total cost =(40 minutes-10 minutes) × $2 + $3.50
Total cost= $63.5
Productivity =$400/$63.5
Productivity= $6.299
Productivity=$6.30 (Approximately)
Company B
Total cost =(40 minutes-12 minutes) × $2 + $3.60
Total cost=$59.6
Productivity = $400/$59.6
Productivity = $6.71
Summary
Approach Productivity (Revenue per Dollar Input)
Current $5 +- 0.01
Company A $6.30+- 0.01
Company B $6.71+-0.01
Based on the above calculation the option that would have the highest productivity in terms of revenue per dollar of input is Company B with a productivity of $6.71
In conclusion, if a property title search firm is contemplating using online software to increase its search productivity. The option that would have the highest productivity in terms of revenue per dollar of input is Company B.
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