Cost Minimization of an Academic Advisory Business through Linear Programming

IG González–Palomo, A Vargas-Moreno, AM García-León, EP Puente-Aguilar, AY Aguilar-Villarreal, and P Gómez-Fuentes

Universidad Autónoma de Nuevo León Facultad de Ciencias Químicas, Ave.

Universidad S/N, Ciudad Universitaria, C.P. 66455, San Nicolás de los Garza, Nuevo León, México.

Corresponding author's Email: azucenamgl@yahoo.fr

Author Note: Azucena Minerva García-León is a Full Time Professor (scientist and lecturer) in the Faculty of Chemistry Sciences of the Universidad Autónoma de Nuevo León (UANL). She is a member of the graduate fields of Industrial Engineering. Since June 2005, he has been working as researcher in the field of process optimization. She got the Applied Economic Philosophy Doctorate degree from the Université Pierre Mendès France at Grenoble, France (2004). She received the Industrial Engineering Master degree from the École Nationale Supérieure de Génie Industriel at Institut National Polytechnique de Grenoble, France (2000). She got the Industrial Engineering Master degree from the Universidad de la Américas-Puebla at Puebla, México (1996). Finally, she obtained the Industrial Engineering degree from the Universidad de la Américas-Puebla at Puebla, México (1994).

Abstract: The main objective of this research is to minimize the costs of a company that offers academic advisory services in order to increase its profits. First, the current state of the business was analyzed, as well as the service process, the operation cost, the key business indicators and the administrative management using various tools. A linear model was constructed considering the parameters of number of customers according to the different types of services such as regular courses, courses for third examination opportunity and online courses. The objective function minimizes variable costs by type of service. The constraints were established in order that monthly fixed costs were covered without reducing profit margins by type of service, in addition the following restrictions must be met: a minimum number of customers undergoing third examination opportunity, a maximum number of customers enrolled in the online course, a minimum proportion of customers enrolled in the online course, a monthly minimum total income, a maximum proportion of customers enrolled in the online course compared to the other courses and a minimum total amount of customers. Fixed and variable costs were improved before modeling, since they accounted for about 63% of income, falling to only 58%. Taking into account the restrictions, the number of customers needed to achieve the best business profit is to offer 84 places in regular course, 30 in the third examination opportunity course and 36 in the online course. The results obtained from the model solution show that business profits increased 16% with respect to the initial business status and total costs were reduced by 8%.

Keywords: Linear Programming, Cost Minimization, Services, Profit Increase

1. Introduction

The present work focuses on a case of study carried out in a growing business dedicated to provide academic advisory to middle and upper level students, the business is located in the metropolitan area of Monterrey city, at Nuevo León state. Academic advisory or counseling is one of the main practices to improve school retention and decrease drop-outs in higher education students according to Campillo et al. (2016). Counseling is a systematic process based on a close relationship between the student and the counselor who seeks to help the student reach his educational goals in order to achieve the full understanding of a particular subject (Winston et al., 1982).

Academic counseling is different from tutoring, since it is an activity primarily aimed at the academic area. In the present case of study, academic counseling consists of sessions with an established period of time attended by an advisor anddirected to a student or group of students outside of their school time dedicated on specific subjects of their domain.

There are several organizational models of the academic consultancies (Upcraft et al., 2004) for purposes of the business being analyzed, the advisory service provided is classified into three modalities according to the need of thestudents: a) first opportunity or regular students, taking a face-to-face course to take a regular exam at their home institution; b) third opportunity examination students attending face-to-face counseling to prepare for a third-opportunity examination at their home education institution; c) students online, the student attends counseling and then is advised online.

Proceedings of the 6th Annual World Conferenceof the Society for Industrial and Systems Engineering,Herndon, VA, USAOctober 19-20, 2017

ISBN: 97819384961-0-3 146