Talbot Partners is consulting firm with clients across nation. Within company is travel group which arranges flights and hotel accommodations for its over 1,000 consultants, cost of operating travel group (excluding costs associated with actual travel like hotel cost and air fare) amounts to approximately $800,000.
Reeently, Talbot Partners has conducted AEM study that has determined the following:
Each consultant takes approximately 20 business trips per year.
On average, 30 percent of trips are rescheduled due to conflicts and poor planning.
Travel group employs 14 individuals at $45,000 each to book travel. Additionally, there is a travel manager and \ assistant travel manager.
Benchmarking with \ Talbot Partners' client points out that client incurs $30 cost per completed trip to book travel.
Required
Estimate cost incurred by Talbot Partners compared to benchmark cost.
Talbot Partners is planning process improvement initiative aimed at decreasing scheduling conflicts. What would be savings if rescheduling could be reduced by 50 percent? Suppose that the only variable cost in travel services is wages paid to employees who book travel.