10. 6.66 points PA 3-7 A small mortgage lender has one receptionist... A small m
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10. 6.66 points PA 3-7 A small mortgage lender has one receptionist... A small mortgage lender has one receptionist, four loan officers, and two office managers. When applicants apply for a new loan in person, they first fill out paperwork with the receptionist. Then the applicants meet with one of the loan officers to discuss their needs. The loan officer spends additional time processing the application after the applicants leave the office. Finally, the application must be reviewed by an office manager before it can be approved. The following table lists the processing times at each stage. The office is open for eight hours per day, five days per weck. Staffing (Number of Activity Time (Hours per Loan) Resource Loan officers Office Round "Utilization rate" to a whole percent. a. What is the bottleneck of the process? Office managers b. Assuming unlimited demand, what is the process flow loans per week rate (in loans per week)? If the customer demand is 18 loans per week, what is the utilization of the office managers resource? percent Assuming that the office currently has no backlog of d. loans that it is processing, how long will it take to hours complete 10 loans?Explanation / Answer
Effective capacity of each resource = Activity time ( Hours per loan) / Staffing ( Number of employees)
Therefore,
Effective capacity of the resource “Receptionist” = 1/1 = 1 hour per employee
Effective capacity of the resource “Loan officers” = 7/4 = 1.75 hours per employee
Effective capacity of the resource “Office managers” = 4/2 = 2 hours per employee
Since , resource “Office Managers” has the maximum effective processing time , it is the bottleneck of the process
Process flow rate will be determined by the effective capacity of the bottleneck resource “Office Managers”.
Amount of hours available per week = 8 hours/ day x 5 days per week = 40 hours
Therefore , Process flow rate
= Available hours per week / Effective capacity of the bottleneck resource
=40 / 2
= 20 loans per week
Utilization of office manager resources at customer demand of 18 loans per week
= 18 per week/ Process flow rate of 20 per week x 100
= 90%
With no backlog of loans , the system is empty.
Time it will take for the first loan to pass through the system and arrive at the end of last step will be
= Sum of activity times ( Hours per loan ) at each of the resource
= 1 + 7 + 4
= 12 hours
Total time to complete 10 loans under such situation
= Time it will take for the first loan to pass through the system + 10 loans/ Process flow rate
= 12 hours + 10/20 weeks
= 12 hours + 0.5 weeks
= 12 hours + 0.5 x 40 hours
= 12 hours + 20 hours
= 32 hours
- Bottleneck of the process : Office Managers
- Process flow rate at unlimited demand ( loans/ week ) = 20
- Utilization of Office Manager resources = 90%
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