Question
An enterprising student has set up an internship clearinghouse for business students. Each student who uses the service fills out a form and lists up to 10 companies that he or she would like to have contacted. The clearninghouse has a choice of two methods to use for processing the forms. The traditional method requires about 20 minutes to review the form and arrange the information in the proper order for processing. Once this setup is done, it takes only two minutes per company requested to complete the processing. The other alternataive uses an optical scan/retrieve system, which takes only a minute to prepare but requires five minutes per compaany for completing the processing. If it costs about the same amount per minute for processing with either of the two methods, when shoiuld each be used?
Explanation / Answer
It depends. What is the average number of companies listed? If 1 company, then the first method costs 22 minutes and the second method costs 6 minutes. Method 2 cheaper. If 10 companies, the first method costs 40 minutes and the second method costs 51 minutes. Method 1 cheaper. I'll leave it as an exercise for the student to prove that 5 or less makes method 2 cheaper and 6 or more makes method 1 cheaper. Hence, if the mean number of listings is < 5, use method 2. If the mean >=6, use method 1.