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Car Services

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Submitted By nclassyspirit
Words 1956
Pages 8
Problem:
Car Services Ltd (CSL) rends motor vehicle breakdown recovery service to its members. It attracts new members through a television advertising campaign that encourages potential clients to telephone a free call number for further information and the opportunity to immediately enroll with a credit card. Members are offered the choice of three levels of annual service contract in descending order of coverage and price: Gold, Silver and Standard. The telephone inquiries come through to a call centre staffed by CSL employees at the company’s premises who are paid a basic salary and a bonus of each new member that they successfully enroll. Located in the same building on another floor is the Car Hospital (CH) team who take the calls from the stranded motorists and arrange for a franchised garage to deal with the breakdown. These garages are independently owned and CSL pay them a fee for every callout that they undertake. CSL has recently (after January 2004) commenced employing trained mechanics on enhanced salaries to dispense technical advice to members on the telephone in the hope that a proportion of the call-outs to franchised garages will be avoided. Detailed information on costs, revenues, business activity and staff is displayed in the following tables.

Table 1
Cost, Revenue and business Activity data for 2004
| |Gold |Silver |Standard |
|Annual subscription fee |Rs.120 |Rs.80 |Rs.65 |
|Probability of a member’s requiring | | | |
|the call out service during the year |0.25 |0.4

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