Solution to Bonus Problem 3: Telephone Survey1

For a telephone survey, a marketing research group needs to contact at least

150 wives, 120 husbands, 100 single adult males, and 110 single adult females.
It costs $2 to make a daytime call and (because of higher labor costs) $5 to
make an evening call. The table below lists the results that can be expected.
For example, 30% of all daytime calls are answered by a wife, and 15% of all
evening calls are answered by a single male. Because of a limited staff, at
most half of all phone calls can be evening calls.
Person Responding Percentage of Daytime Calls Percentage of Evening Calls
Wife 30 30
Husband 10 30
Single male 10 15
Single female 10 20
None 40 5
Data for Phone Problem

1
Based on 3-20 and 3-21 (p. 101) in Practical Management Science (2nd ed., Winston and Albright, 2001
Duxbury Press). Solution by David Juran, 2001.
 1. Determine how to minimize the cost of completing the survey.

Managerial Problem Definition

We want to minimize the total cost of completing the survey, subject to the various
probabilities of reaching certain types of people at certain times of the day, costs of
making calls, and minimum requirements for numbers of calls to certain demographic
groups.
Decision Variables
We need to decide how many evening calls and how many daytime calls to make.
Objective
Minimize the total cost.
Constraints
We need to contact 150 wives, 120 husbands, 100 single adult males, and 110 single
adult females. At most half of all phone calls can be evening calls.

Mathematical Formulation:
Decision Variables
X1 = Daytime Calls, X2 = Evening Calls
Objective
Minimize Z = 2X1 + 5X2
Constraints
0.30X1 + 0.30X2 ≥ 150
0.10X1 + 0.30X2 ≥ 120
0.10X1 + 0.15X2 ≥ 100
0.10X1 + 0.20X2 ≥ 110
1X1 ≥ 1X2
1X1, 1X2 ≥ 0

Decision Models 2 Prof. Juran

Here is a spreadsheet model for the problem:
A B C D E F G H
1 Percentages Daytime Evening
2 Wife 30% 30%
3 Husband 10% 30%
4 Single male 10% 15%
5 Single female 10% 20%
6 None 40% 5%
7 Sum 100% 100%
8
9 Cost/call $ 2.00 $ 5.00
10
11 Daytime Evening Total =SUM(B12:C12)
12 Calls made 1 1 2
13 <= =0.5*D12
14 Max evening calls 1
15
16 Contacts Made Required
17 Wife 0.6 >= 150
18 Husband 0.4 >= 120
19 Single male 0.25 >= 100
20 Single female 0.3 >= 110
21 0 0
22 Total cost $ 7.00 =SUMPRODUCT($B$12:$C$12,B5:C5)
23
=SUMPRODUCT($B$12:$C$12,B9:C9)
24
25

Decision Models 3 Prof. Juran

 A B C D
1 Percentages Daytime Evening
2 Wife 30% 30%
3 Husband 10% 30%
4 Single male 10% 15%
5 Single female 10% 20%
6 None 40% 5%
7 Sum 100% 100%
8
9 Cost/call $ 2.00 $ 5.00
10
11 Daytime Evening Total
12 Calls made 900 100 1000
13 <=
14 Max evening calls 500
15
16 Contacts Made Required
17 Wife 300 >= 150
18 Husband 120 >= 120
19 Single male 105 >= 100
20 Single female 110 >= 110
21 0 0
22 Total cost $ 2,300.00
The optimal solution is to make 900 Daytime calls and 100 Evening calls, for a total cost
of $2,300.

Decision Models 4 Prof. Juran

 2. Starting with the optimal solution to the initial problem, use the SolverTable add-
in to investigate changes in the unit cost of either type of call. Specifically,
investigate changes in the cost of a daytime call, with the cost of an evening call
fixed, to see when (if ever) only daytime calls or only evening calls will be made.
Select Data — SolverTable, pick Oneway Table, and click OK.

The input cell is the value that we want to vary (in this case B9, the cost of a daytime
call). We specify a range of values for this cell (here, $0.00 to $20.00 in increments of
$1.00).
We also specify Output Cells (here, the numbers of each type of call — cells B12:C12,
and the total cost — cell B22).
Finally, we tell SolverTable to write its output starting in cell F1.

SolverTable does the rest, creating the following output:

Decision Models 5 Prof. Juran

 F G H I
1 Daytime Evening Total Cost
2 0 1200 0 $ -
3 1 1200 0 $ 1,200.00
4 2 900 100 $ 2,300.00
5 3 700 200 $ 3,100.00
6 4 400 400 $ 3,600.00
7 5 400 400 $ 4,000.00
8 6 400 400 $ 4,400.00
9 7 400 400 $ 4,800.00
10 8 400 400 $ 5,200.00
11 9 400 400 $ 5,600.00
12 10 400 400 $ 6,000.00
13 11 400 400 $ 6,400.00
14 12 400 400 $ 6,800.00
15 13 400 400 $ 7,200.00
16 14 400 400 $ 7,600.00
17 15 400 400 $ 8,000.00
18 16 400 400 $ 8,400.00
19 17 400 400 $ 8,800.00
20 18 400 400 $ 9,200.00
21 19 400 400 $ 9,600.00
22 20 400 400 $ 10,000.00
The SolverTable output can be used to create a chart:

Sensitivity Analysis
1400 $7,000

1200 $6,000
Daytime
Evening
1000 Total Cost $5,000
Calls Made

Total Cost
800 $4,000

600 $3,000

400 $2,000

200 $1,000

0 $-
$- $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00 $9.00 $10.00

Cost per Daytime Call

Conclusion: If daytime calls are very inexpensive, we can dispense with evening calls
altogether. However, we will always have to make at least 400 daytime calls, no matter
how expensive they are.

Decision Models 6 Prof. Juran

 3. Repeat the analysis by changing the cost of an evening call and keeping the cost
of a daytime call fixed.
These results are consistent with those from Part 2. We will always make at least 400
daytime calls.

Sensitivity Analysis
1400 $3,000

1200
$2,500

1000
$2,000
Calls Made

Total Cost
800
Daytime $1,500
600 Evening
Total cost
$1,000
400

$500
200

0 $-
$- $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00 $9.00 $10.00

Cost per Evening Call

Decision Models 7 Prof. Juran