Question: The manager of a machine-parts distributor is about to buy an automated telephone ordering system. The manager estimates that each phone call handled by such a system will result in $1.00 more contribution than if the phone call is handled by a sales representative. The company receives 30 calls per hour that could be handled by such a system.
The manager has narrowed his search to two possibilities, Telephone System A and Telephone System B. Telephone System A can handle 20 calls per hour and is priced at $50,000. Telephone System B can handle 24 calls per hour. Both telephone systems have the same expected life span, 6,000 hours (which does not include down time). Both Telephone System A and Telephone System B are expected to break down 8 times during their life span. However, the average cost of repairing Telephone System A is $600 whereas the average cost of repairing Telephone System B is $1,000. For this manager, what is the value to the customer of Telephone System B?