3.Universal Claims Processors processes insurance claims for large national insu
ID: 3119733 • Letter: 3
Question
3.Universal Claims Processors processes insurance claims for large national insurance companies. Most claim processing is done by a large pool of computer operators, some of whom are permanent and some of whom are temporary. A permanent operator can process 16 claims per day, whereas a temporary operator can process 12 per day, and on average the company processes at least 450 claims each day. Thecompany has 40 computer workstations. A permanent operator generates about 0.5 claim with errors each day, whereas a temporary operator averages about 1.4 defective claims per day. The company wants to limit claims with errors to 25 per day. A permanent operator is paid $64 per day, and a temporary operator is paid $42 per day. The company wants to determine the number of permanent and temporary operators to hire in order to minimize costs. a. Formulate a linear programming model for this problem. b. Solve this model by using graphical analysis.
Explanation / Answer
Answer:
(A)
Formulate a linear programming model for this
P = number of permanent operators
T = number of temporary operators
C = cost
Minimize the objective function
C = 64*P + 42*T
Subject to
16*P + 12*T 450
P + T 40
0.5*P + 1.4*T 25
P 0
T 0
Answer
Part (B)
The lowest cost ($1700 per day) occurs when P = 20 and T = 10
However, these are rounded values. One of the boundary conditions is violated using these numbers.
The volume is only 440 per day. The volume should be 450 per day
If you hire one more temporary employee to correct this problem, the error rate also increases to slightly over 25 errors per day.
It’s a business decision. The correct answer depends on what is more important: an error rate of under 25, or a volume of over 450.
Answer
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.