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. ..

installation.

Multi-line savings at a given level of ZIP+4 use are based on the curve of

savings versus ZIP+4 use presented pessimistic, median, and optimistic

later. The performance

curve is treated as an assumptions built in.

uncertainty,

with

Option

C:

Multi-line

OCR

without

ZIP+4.

Option

C

is

based

on

the

same

assumptions as Option B, except that the cost of the ZIP+4 rate incentive is dropped (since ZIP+4 would be terminated) and savings are estimated based on zero use of ZIP+4. For 1985-87, OTA assumed that savings would be the same as for the Phase I single-line OCRs with zero ZIP+4 use. For 1988-90, OTA assumed that one-third of the full savings benefit of Phase I single-line OCR conversion to multi-line would be realized

in

1989,

and

two-thirds

of

the

savings

benefit

in

1990.

OTA

assumed

that

Phase

II

multi-line OCR savings would phase in

over

1988-90, and that full savings of converted

Phase I OCRs and Phase II multi-line OCRs would begin in 1991.

Option D: Automatic Conversion. Here, OTA assumed that single-line OCRs would . be purchased and installed on the same schedule as in Option A. Over the 1985-87 period, R&D and release-loan testing on single- to multi-line conversion would be conducted at $5 million per year. All single-line OCRs (Phase I and Phase II) would be converted to multi-line at a total cost of $31 million ($200,000 per conversion times 655 units) spread over 3 years, 1988-90. Clerk/carrier savings are assumed to be the same as option A savings through 1990, and the same as option B from 1991 on.

Option E: Hedge Conversion. In option E, OTA assumed conversion of single-line OCRs to multi-line only if ZIP+4 use is low at the end of 1987. If ZIP+4 use is at the high or median level, conversion would not take place and option E would be the same as option A except for a $5 million per year R&D and release-loan cost for 3 years, 1985- 87. If ZIP+4 use is low, then conversion would take place and option E would be the same as option D.

39

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