Talbot Partners is a consulting firm with clients across the nation. Within the company is a travel group that arranges flights and hotel accommodations for its over 1,000 consultants. The cost of operating the travel group (excluding the cost associated with actual travel such as hotel cost and air fare) amounts to approximately $800,000.
Recently, Talbot Partners has conducted an ABM study that has determined the following:
1. Each consultant takes approximately 20 business trips per year
2. On average, 30 percent of trips are rescheduled due to conflicts and poor planning.
3. The travel group employs 14 individuals at $5,000 each to book travel. In addition, there is a travel manager and an asst, travel manager.
4. Benchmarking with a Talbot Partner' s client indicates that the client incurs $30 cost per completed trip to book travel.
Answer needed:
A. Evaluate the cost incurred by Talbots Partners compared to the benchmark cost.
B. Talbot Partners is planning a process improvement initiative aimed at reducing scheduling conflicts. What would be the savings if rescheduling could be reduced by 50 percent? Assume that the only variable cost in travel services is the wages paid to employees who book travel.