Question

In: Operations Management

You are the manager of a project to improve the healthcare insurance claims auditing process.  For each...

You are the manager of a project to improve the healthcare insurance claims auditing process.  For each day that the claims auditing process takes, there is an associated cost of $1,700 so this cost is saved for each day reduction in the project completion time.  Following is the information for the healthcare claims auditing process. The normal time and crash time are the times it will take to complete each activity under each of those scenarios (normal and crash).  The Total Normal Cost and the Total Crash Cost are the total costs for completing that activity in that time.

Activity

Normal Time (days)

Crash Time (days)

Total Normal Cost

Total Crash Cost

Immediate Predecessor(s)

A

6

4

$4,000

$6,000

--

B

4

2

$4,000

$7,000

--

C

6

3

$3,000

$6,000

B

D

6

5

$4,500

$5,000

A

E

3

3

$10,000

$10,000

C

   

  1. Considering all of the cost, what is the cost of the project if all of the activities are crashed to their Crash Times?
  2. Based on the information provided, what is the minimum-cost schedule?  For this minimum-cost schedule, identify the critical path, the time for each activity and the total cost for completing the project?

Solutions

Expert Solution

slope of an activity = crash cost - normal cost / normal time - crash time

activity slope
A 1000
B 1500
C 1000
D 500
E Na

BCE is the critical path with duration 13.

crashing schedule

(a) The cheapest activity to crash on the critical path is C which can be crashed by 1 day at a cost of 1000.

Now there are 2 critical paths BCE and  AD with duration 12 each.


(b) Now, the two cheapest activites to crash on CP are D and C, which can be crashed for one day each at a cost of 1500. Duration is now 11.

(c) Now, the two cheapest activites to crash on CP are A and C, which can be crashed for one day each at a cost of 2000. Duration is now 10.

(d) Now, the two cheapest activites to crash on CP are A and B, which can be crashed for one day each at a cost of 2500. Duration is now 9.

No more crashing is possible now.

cost with different durations

Duration Direct cost Crash cost saving net cost
13 25500 0 0 25500
12 25500 1000 1700 24800
11 25500 2500 3400 24600
10 25500 4500 5100 24900
9 25500 7000 6800 25700

least cost duration is 11.

keosha answered 1 year ago
Next > < Previous

Related Solutions

You are the manager of a project to improve the billing process at your firm. The...
You are the manager of a project to improve the billing process at your firm. The table below contains the data you will need to conduct a cost analysis of the project. Indirect costs are $1600 per week, and penalty costs are $1200 per week after week 12. a- What is the minimum-cost schedule for this project? b- What is the difference in total project costs between the earliest completion time of the project using "normal" times and the minimum-cost...
Process Capability (Cpk and Cp) The operations manager of an insurance claims- processing department wants to...
Process Capability (Cpk and Cp) The operations manager of an insurance claims- processing department wants to determine the claims-processing capability of the department. Claims usually take a minimum of four days to handle. The company has a commitment to handle all claims within 10 days. On the average, claims are processed in eight days and processing has a standard deviation of one day. a. Compute Cp and Cpk for the claims-processing department. Based on these computations, should the claims department...
You are the Claims Manager for a large auto insurance firm. You know the following facts:...
You are the Claims Manager for a large auto insurance firm. You know the following facts: • 25% of your policy-holders are younger (age 16-34). Within this group, 55% are men and 45% are women. Only some of these policy holders make an accident claim. The men have a 10% probability of making a claim, while the women have a 5% probability of making a claim. • 50% of your policy-holders are middle-aged (ages 35-59). Of these, 50% are men...
You are the Claims Manager for a large auto insurance firm. You know the following facts:...
You are the Claims Manager for a large auto insurance firm. You know the following facts: • 25% of your policy-holders are younger (age 16-34). Within this group, 55% are men and 45% are women. Only some of these policy holders make an accident claim. The men have a 10% probability of making a claim, while the women have a 5% probability of making a claim. • 50% of your policy-holders are middle-aged (ages 35-59). Of these, 50% are men...
You are the Claims Manager for a large auto insurance firm. You know the following facts:...
You are the Claims Manager for a large auto insurance firm. You know the following facts: • 25% of your policy-holders are younger (age 16-34). Within this group, 55% are men and 45% are women. Only some of these policy holders make an accident claim. The men have a 10% probability of making a claim, while the women have a 5% probability of making a claim. • 50% of your policy-holders are middle-aged (ages 35-59). Of these, 50% are men...
You are the Claims Manager for a large auto insurance firm. You know the following facts:...
You are the Claims Manager for a large auto insurance firm. You know the following facts: • 25% of your policy-holders are younger (age 16-34). Within this group, 55% are men and 45% are women. Only some of these policy holders make an accident claim. The men have a 10% probability of making a claim, while the women have a 5% probability of making a claim. • 50% of your policy-holders are middle-aged (ages 35-59). Of these, 50% are men...
As the project manager for a not-for-profit organization, you were notified that your proposal to improve...
As the project manager for a not-for-profit organization, you were notified that your proposal to improve the safety of the Lafayette Park in Los Angeles was approved. You and your team will receive funding for $50,000. Please prepare a positive letter informing your team members and outline the safety improvements you propose to be implemented. Prepare this into a Positive Letter.
You are assigned to a workflow project for a call center to capture new insurance claims...
You are assigned to a workflow project for a call center to capture new insurance claims for car accidents. Considering what you have learned in prior lessons, what type of questions would you ask and which stakeholders are important to engage in the project?
Claims arrive to an insurance company according to a Poisson Process. The average number of claims...
Claims arrive to an insurance company according to a Poisson Process. The average number of claims reported every day is 2.5. It has been reported that 15% of these claims are fake. What is the probability that in a week of five business day 10 claims arrive and one of these is fake? ONLY ANSWERRRRR
An insurance agency wants to analyze its claims process. There are two steps in the process:...
An insurance agency wants to analyze its claims process. There are two steps in the process: evaluation and payment processing. When a customer claim arrives at the agency, it is first evaluated to see if it is a legitimate claim, where the customer would receive a payment. If it is indeed legitimate, the claim goes to payment processing, where additional checks are performed and the agency cuts a check to the customer. The agency on average receives 30 claims per...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT