12. You have just been promoted to manage the process defined by the five stages
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Question
12. You 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 27 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 specialist takes care of Stage C. a. How many administrative clerks should be hired, assuming a target utilization for them of 85 percent? b. What is the current labor utilization of the coders if two coding specialists are currently on duty? C. What is the total process (output) capacity in units per hour for the five-stage process A to E, assuming three administrative clerks, two coding specialists, and four assistant managers are on duty? d. Where do any bottlenecks exist, and what do you recommend to improve this process?Explanation / Answer
A) Total demand = 27 / hour
Total time in the process used by administrative clerks = Stage A time + Stage B time = 5 + 3 = 8 mins
Total units that can be prepared by one clerk = 60 / 8 = 7.5 units per hour
So, for 27 units at 85% utilization , number of clerks required, N = 27/ (7.5*0.85) = ~ 4 clerks
b) Service rate of coders = 60 / 6 = 10 units per hour
Utilization of coders = Demand rate / Service rate * Number of servers = 27/(2*10) = 135%
c) Total time in process used by clerks = 5 +3 = 8 minutes
Service rate for administrative clerks = 60 / 8 = 7.5 units per hour
# of clerks = 3 , hence total serive rate = 22.5 units per hour
Total service rate for 2 coding specialist = 60*2 / 6 = 20 units per hour
Total service rate for 4 assistant managers = 60*4 / 8 = 30 units per hour
d) Coding specialist is a bottleneck. We need to hire 3 coding specialist so that we can produce 30 units per hour and suffice demand. Once this is done, bottleneck would shift to administrative clerk and we need to hire one more clerk.
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