Question

A mortgage service office has the following four activities involved in approving a loan application. Note that a working day is 8 hours and there are 60 minutes in one hour.

Activity	Time (minutes)
A. Property survey	20
B. Credit report	20
C. Title search	40
D. Final decision	30

• Solution inputs are numbers only, no symbols. Percentage is kept as 0.76 instead of 76%.
• Numbers can be in the format of either 3000 or 3,000; 0.95 or .95
• Keep two decimals if not exact, do not round. For example, 3.24923... will be kept as 3.24, but the exact value of 0.625 will be kept as 0.625

1. If each activity is performed by a different person, with four employees, what would be the maximum number of loan applications the office can process per day?    And what is the office's direct labor utilization (DLU) ?  

2. Activities B and C are combined together and assigned to two employees, while the other two employees are responsible for activities A and D respectively. What would be the maximum number of loan applications the office can process per day?    And what is the office's direct labor utilization (DLU) ?  

3. The office now has only three employees, activities B and C are combined together and assigned to one employee, while the other two employees are responsible for activities A and D respectively. Under this setting, what would be the maximum number of loan applications the office can process per day?   And what is the office's direct labor utilization (DLU) ?

4. The office now has only three employees, activities A, B and C are combined together and assigned to two employees, while the other employee is responsible for the last activity D . Under this setting, what would be the maximum number of loan applications the office can process per day?   And what is the office's direct labor utilization (DLU) ?

5. With three employees, every employee can perform any activity and more than one activity. Under this setting, What would be the maximum number of loan applications the office can process per day?   And what is the office's direct labor utilization (DLU) ?  

Answer 1

Output of different resources doing each activity

A = 60/20 =3 per hour

B=60/20=3 per hour'

C= 60/40=1.5 per hour

D= 60/30=2 per hour.

1.The bottleneck is C which has an output rate of 1.5 per hour, and restricts the process to 8*1.5 =12 per day.

Labour utilisation = Utilisation of (A + B+C+D)/4

Utilisation of A = 1.5 /3 = 0.5

Utilisation of B = 1.5/3 =0.5

Utilisation of C= 1.5/1.5 =1

Utilisation pf D = 1.5/2 =0.75

Mean utilisation [ 0.5+1+0.5+0.75]/ 4 =0.6875

2. If B and C are combined together, the output of the combination will be

2 * 60/(40+20) = 2 per hour.

The bottleneck is now D and ( B+C) with output of 2 per hour.

Daily capacity = 8*2 =16 per day.

Utilisation = (2/3 +2/2+2/2)/3 =0.8888

3. If B and C are combined together with one employee. its output

60/(40+20) =1

The bottleneck source will be B+C and the process output will be 1 per hour or 8*1 =8 per day

Avg utikisation = (1/3+1+1/2 )/3 =0.6111

4. Output of A,B and C = 2 x 60/80 = 1.5 per hour

Output of D = 60/30=2 per hour

The bottleneck resource is combination of A,B and C, which has an putput rate of 1.5 per hour or 12 per day.

Utilisation of (A+B+C) = 1.5/1.5 =1

Utilisation of D = 1.5/2 = 0.75

Mean utilisation = 1.75/2 =0.875

Note: As per policies, I can answer first 4 parts of the question. Inconvenience is regretted.