Question

Limited Resources
Maria Pajet, a regional sales representative for UniTec Systems, Inc., has been working about 80 hours per week calling on a total of 123 regular customers each month. Because of family and health considerations, she has decided to reduce her hours to a maximum of 160 per month. Unfortunately, this cutback will require Maria to turn away some of her regular customers or, at least, serve them less frequently than once a month. Maria has developed the following information to assist her in determining how to best allocate time:

	Customer Classification
	Large Business	Small Business	Individual
Number of customers	8	35	80
Average monthly sales per customer	$3,500	$1,800	$800
Commission percentage	5%	8%	10%
Hours per customer per monthly visit	5.0	3.0	2.5

a. Develop a monthly plan that indicates the number of customers Maria should call on in each classification to maximize her monthly sales commissions.
b. Determine the monthly commissions Maria will earn if she implements this plan.

In the first table, calculate the commission per customer and per hour for each customer classification.

In the second table, complete the monthly call/visit plan that would maximize Maria's monthly sales commissions. Then determine Maria's monthly commissions if she implements this plan.

	Commission per customer	Commission per hour
Large business	$Answer	$Answer
Small business	$Answer	$Answer
Individual	$Answer	$Answer

	Monthly Call/Visit Plan
	Total number of customers	Total number of visit hours	Total commissions
Large business	Answer	Answer	Answer
Small business	Answer	Answer	Answer
Individual	Answer	Answer	Answer
Grand totals:	$Answer	Answer	$Answer

Answer 1

1. Since Maria wants to reduce her working hours, so in order to maximise commission earnings she should serve those customers first from which she earns maximum commission per hour and least priority should be given to those from whom she earns less commission per hour. Let us first compute commission per hour from different customers.

	Customer Classification
	Large	Small	Individual
	Business	Business
Number of customers	8	35	80
Average monthly sales per customer(USD)	3,500.00	1,800.00	800.00
Commission percentage	5%	8%	10%
Hours per customer per monthly visit	5	3	2.5
Total Commision (Average monthly sales*Commission percentage) (USD) (A)	1,400	5,040	6,400
Total Hours per month (Number of customers*Hours per customer) (B)	40	105	200
Commission per hour (A)/(B)	35.00	48.00	32.00
Commission per customer (Total Commission / No. of Customers)	175.00	144.00	80.00

Since Maria is earning highest commission per hour from Small Business, so she should give first priority to Small Business, second priority to Large Business and finally to Individuals.

Since she wants to work a maximum of 160 hours for the month, so let us compute the numbers of hours for different types of customers.

Small Business: 105 hours

Large Business: 40 hours

Individuals: 160-105-40 = 15 hours

Number of customers she should serve should be as follows:

Small Business: All 35 customers as she can devote fulll time based on priority to them

Large Business: All 8 customers as she still have sufficient time

Individuals: Since only 15 hours are left for individuals, number of customers will be only 6 (15 i.e. total hours left divided by 2.5 i.e. hours per customer).

Based on above computed plan, Maria's commission will be computed as follows:

	Monthly Call/Visit Plan
	Total number	Total number	Commission	Total
	of customers	of visit hours	per hour	commissions
Large business	8	40	35	1400
Small business	35	105	48	5040
Individual	6	15	32	480
Grand totals:	49	160	115	6920

Apologies for not answering in the exact format required, as somehow I an not able to copy table in the answer.