# A property title search firm is contemplating using online software to increase its search

QUESTION:

A property title search firm is contemplating using online software to increase its search productivity. Currently, an average of 40 minutes is needed to do a title search. The researcher’s cost is \$ 2 per minute. Clients are charged a fee of \$ 400. Company A’s software would reduce the average search time by 10 minutes, at a cost of \$ 3.50 per search. Company B’s software would reduce the average search time by 12 minutes at a cost of \$ 3.60 per search. Which option would have higher productivity in terms of revenue per dollar of input?

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ANSWER:

 Search Approach Search Average Time (min.) Cost per Search Output (\$) Productivity per Dollar Input Current 40 40 min. x \$2/min. = \$80 \$400 \$400/\$80 = \$5.00 Company A 30 (40 – 10) (30 min x \$2/min.) + \$3.50/search = \$63.50 \$400 \$400/\$63.50 = \$6.30 Company B 28 (40 – 12) (28 min. x \$2/min.) + \$3.60/search = \$59.60 \$400 \$400/\$59.60 = \$6.71

This problem expresses the output in terms of standard price rather than in units.

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