Perform a capacity analysis, using the process structure defined by the five sta

ID: 419550 • Letter: P

Question

Perform a capacity analysis, using the process structure defined by the five stages A to E below. The numbers in parentheses (#) are the time in minutes to complete one unit of work. Demand on the process is 23 units per hour, and each unit must be worked on by all five stages. The administrative clerk(s) complete Stages A, B, and D. The assistant manager completes Stage E. The coding specialists takes care of Stage C.

How many administrative clerks should be hired, assuming a target utilization for them of 86 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 four administrative clerks, three coding specialists, and four assistant managers are on duty? Round your answer down to the nearest whole number.

units per hour

Where's the bottleneck(s) exist?

Given the staffing levels in (c), -Select-administrative clerkscoding specialistsassistant managersItem 4 are the bottleneck.

What do you recommend to improve this process?

-Select-IncreasingReducingItem 5 processing times (-Select-increasingreducingItem 6 units/hour) might help to improve the work load balance.

Explanation / Answer

The utilization of resource is determined as follows:

Utilization (%) = [Demand Rate]/[Service Rate x Number of servers] x 100 …. (1)

Demand rate = 23 units per hour

Target labor utilization of the clerks = 86%

The pooled standard service time for the clerks = 6 (for A) + 3 (for B) + 3 (for D) = 12 minutes per unit

Service rate of clerks = 60 minutes/pooled service time per unit = 60/12 = 5 units per hour

Let, N = number of clerks assigned to process

Using formula (1),

0.86 = 23/(5*N)

N = 23/(0.86*5) = 5.34

To achieve 86% utilization minimum number of clerks required are 6

Standard service time for the coder = 6 minutes per unit

Service rate of clerks = 60 minutes/ service time per unit = 60/6 = 10 units per hour

Let, N = number of coders assigned to stage C = 3

Using formula (1),

U = 23/(10*3) x 100 = 76.66%

current labor utilization of the coders if three coding specialists are currently on duty = 76.66%

Resource output per hour = [Time per hour/pooled service time] x number of servers

Resource

Number of Servers (N)

Pooled Service time (t)

Output per hour

O = 60/t x N)

Clerks

12 minutes

60/12*4 = 20

Coders

6 minutes

60/6*3 = 30

Assistant Mangers

5 minutes

60/5*4 = 48

The process output per hour = minimum among the resource’s output/hour = 20 units per hour

Process output per hour = 20 units per hour

Where's the bottleneck(s) exist?

The lowest output per hour is for administrative clerks, thus output of clerks defines the output of process. The output of process is less than the demand rate, thus, administrative clerks are bottleneck for the process. If more clerks are available output of process will increase.

ANS: Administrative clerks

Recommendation:

The bottleneck resource for the process is clerks. So as to improve the output with same staffing level it is required to reduce the service time of the resources. Thus, if the pooled service time of clerks is reduced from 12 minutes to 10 minutes the output of clerks will increase from 20 units to 24 units per hour as follows:

Improved output of clerks = (60/10) x 4 = 24 units.

As the output is more than demand, none of the resources are bottleneck for the process.

ANS: reduce the pooled service time of stages A, B, and D