Reference no: EM133140754

The Gryphon Sports Medical Group (GSMG) in Guelph, Ontario is considering hiring an aggressive collection agency to assist in collecting on past due accounts. Its decision will depend on the number of accounts it anticipates will be past due by more than 90 days. The group has forecasted that if it does not hire the agency, 60% of the accounts will be paid off within 30 days. It projects that 50% of those accounts more than 30 days past due will be paid off within 60 days; 70% of accounts more than 60 days past due will be paid off within 90 days; and only 20% of those accounts more than 90 days past due will be paid off in the next 30 days. Baylor anticipates that, on the average, it will have about 1000 outstanding accounts. Define:

A = average number of accounts with less than 30-day balances

B = average number of accounts with balances between 30 and 60 days

C = average number of accounts with balances between 60 and 90 days

D = average number of delinquent accounts (over 90 days)

GSMG would like to know the average number of delinquent accounts (those past due by more than 90 days) if it does not hire the collection agency.

Required:

a. Is this an optimization or a prediction model? Explain briefly.

b. What is the business objective?

c. Briefly describe what the constraints represent.