ou have just been promoted to manage the process defined by the five stages A to
ID: 419547 • Letter: O
Question
ou have just been promoted to manage the process defined by the five stages A to E shown in the accompanying figure. After three months on the job you realize something is not right with process capacity because your employees experience big pile-ups of work' things take too long to be processed; the opportunity for error is increasing; and the entire process is approaching chaos. Do a capacity analysis of this process. The numbers in parentheses (#) are the time in minutes to complete one unit of work. Demand on the process averages 36 units per hour and each unit must be worked on by all five stages. Administrative clerks complete Stages A and B. The assistant manager completes Stages D and E. Processing times per stage can be combined when labor is assigned two or more stages (i.e., the resources are pooled). The coding specialists takes care of Stage C.
How many administrative clerks should be hired, assuming a target utilization for them of 81 percent? Round your answer up to the nearest whole number.
clerks should be hired.
What is the current labor utilization of the coders if three coding specialists are currently on duty? Round your answer to the nearest whole number.
%
What is the total process (output) capacity in units per hour for the five-stage process A to E, assuming three administrative clerks, three coding specialists, and five assistant managers are on duty? Round your answer down to the nearest whole number.
units per hour
Where do any bottlenecks exist?
Given the staffing levels in (c), -Select-administrative clerkscoding specialistsassistant managersItem 4 are the bottleneck but -Select-administrative clerkscoding specialistsassistant managersItem 5 are a close second.
What do you recommend to improve this process?
-Select-ReducingIncreasingItem 6 standard processing times seems like a good option without hiring additional employees.
Explanation / Answer
The processing capacity of AB by one administrative clerk = 10 minutes
Processing capacity of C by one coding specialist = 6 minutes
Processing capacity of DE by assistant manager = 6 minutes
Since demand is 36 units per hour ( 60 minutes ) , required cycle time should be = 60 / 36 = 1.666
Let ,
Number of administrative clerks should be hired = N
Therefore , effective processing time of AB = 10/B
Since , target utilization of AB is 81% with respect to cycle time of 1.666,
Therefore ,
10/B = 0.81 x 1.666
Or, 10/B = 1.3449
Or, B = 10/1.349
Or, B = 7.41 ( 7 rounded to nearest whole number )
NUMBER OF ADMINISTRATIVE CLERKS SHOULD BE HIRED = 7
Effective processing time of coding with 3 coders = 6 / 3 = 2 minutes
Therefore , current labor utilization of coders
= Effective processing time of coders / Required cycle time x 100
= 2/1.666 x 100
=120.04 % ( 120% rounded to nearest whole number )
CURRENT LABOR UTILIZATION OF CODERS = 120%
Effective processing time of AB with 3 administrative clerks
= 10/3 = 3.33 minutes
Effective processing time of C with 3 coding specialists = 6/3 =2 minutes
Effective processing time of DE with 5 assistant managers = 6/5 = 1.2 minutes
Out of above, AB is the bottleneck process since it has maximum processing time .
Overall capacity of the system is decided by the bottleneck process .
Therefore system can process one work every 3.33 minutes ( 10/3 minutes )
Therefore , hourly capacity of the system
= 60 minutes / 3.33 minutes
= 60 x 3/10
= 18
TOTAL PROCESS CAPACITY IN UNITS PER HOUR = 18
BOTTLENECK EXISTS AT A-B ( ADMINISTRATIVE CLERKS )
NUMBER OF ADMINISTRATIVE CLERKS SHOULD BE HIRED = 7
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