HARVARD BUSINESS PUBLISHING HOW TO PLAY SYSTEM UTILIZATION IN SERVICE MANAGEMENT An Operations Management Simulation How...

Transcribed Image Text:

HARVARD BUSINESS PUBLISHING HOW TO PLAY SYSTEM UTILIZATION IN SERVICE MANAGEMENT An Operations Management Simulation How to Play SCENARIO 1 Interarrival Time: 10 min SCENARIO 2 SCENARIO 3 QUIZ QUESTIONS 30 30 30 30 time std dev 7.0 1.0 min policy time std dev 8.7 1.0 min policy 9.4 time std dev min 1.0 policy time std dev min 8.1 1.0 policy Initial Total WIP 120 RUN 1 STEP RUN TO END inutes) Introduction This simulation is loosely based on a case (HBS 692-015), but the numbers in the simulation are entirely different, and some of the processes differ, too. The purpose of this simulation is to illustrate some of the concepts in the case, but the simulation shows a drastically simplified version of the situation. In this simulation, you will primarily learn about how to manage Turn Around Time (TAT) in a service organization. Here, an insurance company receives requests for insurance policies. The company has four steps in processing these requests before it can complete the policy and respond to the customer. The four steps, or departments, are numbered 1 through 4, left to right on the screen. Assume that turn around time is equivalent to the throughput time for all four processes-the time it takes from a policy entering the office at the left to that same policy leaving the office at the right. Print slides > HARVARD BUSINESS PUBLISHING HOW TO PLAY SYSTEM UTILIZATION IN SERVICE MANAGEMENT An Operations Management Simulation Scenario 1 In this scenario, assume the office processes just one type of policy: a request for underwriting (RUN). Because all policy requests are RUNS, there is low variance in processing times at each workstation. New policy requests arrive every 10 minutes. SCENARIO 1 SCENARIO 2 Interarrival Time: 10 min SCENARIO 3 QUIZ QUESTIONS 30 30 30 Request for Underwriting (RUN) 30 time 7.0 std dev 1.0 min policy time std dev min time std dev min time 8.7 1.0 policy 9.4 1.0 policy 8.1 std dev 1.0 min policy Initial Total WIP 120 RUN 1 STEP RUN TO END Actual Turnaround Time 0 Days, 0 Hours, 0 Minutes Actual TAT (minutes) 4d 3h 20m 3d 2h 30m 21h 40m Initial Total WIP: 40 Value: 0 days 5 hrs 59 min 1d on som Od Oh Om 40 80 Direct Labor Content: 33.2 minutes 160 200 240 280 120 Initial Total WIP (number of policies) HARVARD BUSINESS PUBLISHING HOW TO PLAY SCENARIO 1 SYSTEM UTILIZATION IN SERVICE MANAGEMENT An Operations Management Simulation Scenario 2 In this scenario, the company has increased the number (and hence rate) of new policy requests coming to this office. To accommodate the increase in demand, an additional worker has been added to the staff. The new worker is cross- trained for all workstations. Allocate the new worker's time to maximize revenue - i.e., set the number of workers at each station to a number between 1 and 2 so that the total workforce sums to 5. 0 0 Request for Underwriting (RUN) Direct Labor Content: 32.3 minutes Unit Revenue: $50 0 SCENARIO 2 Policy IAT: Std dev: 7 min 1 min SCENARIO 3 time 7.0 std dev 1.0 time std dev time std dev time std dev min policy min min min 9.1 3.0 8.6 1.0 7.6 3.0 policy policy policy QUIZ QUESTIONS Staffing Level: 1 Initial Total WIP 0 RUN FOR 12 WEEKS 1 Average Turnaround Time: 0 Days, 0 Hours, 0 Minutes Total 12 Weeks Revenue: $0 1 1 Turn Around Time Revenue Staffing Level WIP HARVARD BUSINESS PUBLISHING HOW TO PLAY SCENARIO 1 SYSTEM UTILIZATION IN SERVICE MANAGEMENT An Operations Management Simulation Scenario 3 In this scenario, assume that you could set the mean processing time for every policy at every workstation. The policy types still differ in variance, with RUNS showing the biggest difference in processing time across individual policies. Policies arrive for processing at an average of one every 20 minutes. What product mix and processing time will maximize revenue in the long run? Policy Request for Underwriting (RUN) Request for Renewal (RERUN) Request for Additional Price (RAP) 2 SCENARIO 2 IAT: Std dev: 20 min 1 min SCENARIO 3 QUIZ QUESTIONS 0 Direct Labor Content: Unit Revenue: 68.0 minutes 68.0 minutes $50 $30 68.0 minutes $42 RUN: time std dev 17.0 14.0 time std dev time std dev time std dev min min min min 17.0 14.0 17.0 14.0 17.0 14.0 RERUN: 17.0 1.0 policy 17.0 1.0 policy 17.0 1.0 policy 17.0 1.0 policy RAP: 17.0 7.0 17.0 7.0 17.0 7.0 17.0 7.0 Product Mix Processing Time RUN 50 % 17.0 RERUN 50 % RAP 0 % Average Turnaround Time: Total 12 Weeks Revenue: Credite *A work day in O boure RUN RERUN RAP Final WIP Revenue WIP 50% 50% 0% 2.00 $57,000 50% 50% 0% 6.00 $56,960 Animation Speed: 50% 50% 0% 1.00 $57,280 === I reset 0 Days, 2 Hours, 14 Minutes $57,000 2011 Wanvard Business Cabool Dublishing. Developed. astaarabin with Caria Online Circulation HARVARD BUSINESS PUBLISHING HOW TO PLAY SYSTEM UTILIZATION IN SERVICE MANAGEMENT An Operations Management Simulation How to Play SCENARIO 1 Interarrival Time: 10 min SCENARIO 2 SCENARIO 3 QUIZ QUESTIONS 30 30 30 30 time std dev 7.0 1.0 min policy time std dev 8.7 1.0 min policy 9.4 time std dev min 1.0 policy time std dev min 8.1 1.0 policy Initial Total WIP 120 RUN 1 STEP RUN TO END inutes) Introduction This simulation is loosely based on a case (HBS 692-015), but the numbers in the simulation are entirely different, and some of the processes differ, too. The purpose of this simulation is to illustrate some of the concepts in the case, but the simulation shows a drastically simplified version of the situation. In this simulation, you will primarily learn about how to manage Turn Around Time (TAT) in a service organization. Here, an insurance company receives requests for insurance policies. The company has four steps in processing these requests before it can complete the policy and respond to the customer. The four steps, or departments, are numbered 1 through 4, left to right on the screen. Assume that turn around time is equivalent to the throughput time for all four processes-the time it takes from a policy entering the office at the left to that same policy leaving the office at the right. Print slides > HARVARD BUSINESS PUBLISHING HOW TO PLAY SYSTEM UTILIZATION IN SERVICE MANAGEMENT An Operations Management Simulation Scenario 1 In this scenario, assume the office processes just one type of policy: a request for underwriting (RUN). Because all policy requests are RUNS, there is low variance in processing times at each workstation. New policy requests arrive every 10 minutes. SCENARIO 1 SCENARIO 2 Interarrival Time: 10 min SCENARIO 3 QUIZ QUESTIONS 30 30 30 Request for Underwriting (RUN) 30 time 7.0 std dev 1.0 min policy time std dev min time std dev min time 8.7 1.0 policy 9.4 1.0 policy 8.1 std dev 1.0 min policy Initial Total WIP 120 RUN 1 STEP RUN TO END Actual Turnaround Time 0 Days, 0 Hours, 0 Minutes Actual TAT (minutes) 4d 3h 20m 3d 2h 30m 21h 40m Initial Total WIP: 40 Value: 0 days 5 hrs 59 min 1d on som Od Oh Om 40 80 Direct Labor Content: 33.2 minutes 160 200 240 280 120 Initial Total WIP (number of policies) HARVARD BUSINESS PUBLISHING HOW TO PLAY SCENARIO 1 SYSTEM UTILIZATION IN SERVICE MANAGEMENT An Operations Management Simulation Scenario 2 In this scenario, the company has increased the number (and hence rate) of new policy requests coming to this office. To accommodate the increase in demand, an additional worker has been added to the staff. The new worker is cross- trained for all workstations. Allocate the new worker's time to maximize revenue - i.e., set the number of workers at each station to a number between 1 and 2 so that the total workforce sums to 5. 0 0 Request for Underwriting (RUN) Direct Labor Content: 32.3 minutes Unit Revenue: $50 0 SCENARIO 2 Policy IAT: Std dev: 7 min 1 min SCENARIO 3 time 7.0 std dev 1.0 time std dev time std dev time std dev min policy min min min 9.1 3.0 8.6 1.0 7.6 3.0 policy policy policy QUIZ QUESTIONS Staffing Level: 1 Initial Total WIP 0 RUN FOR 12 WEEKS 1 Average Turnaround Time: 0 Days, 0 Hours, 0 Minutes Total 12 Weeks Revenue: $0 1 1 Turn Around Time Revenue Staffing Level WIP HARVARD BUSINESS PUBLISHING HOW TO PLAY SCENARIO 1 SYSTEM UTILIZATION IN SERVICE MANAGEMENT An Operations Management Simulation Scenario 3 In this scenario, assume that you could set the mean processing time for every policy at every workstation. The policy types still differ in variance, with RUNS showing the biggest difference in processing time across individual policies. Policies arrive for processing at an average of one every 20 minutes. What product mix and processing time will maximize revenue in the long run? Policy Request for Underwriting (RUN) Request for Renewal (RERUN) Request for Additional Price (RAP) 2 SCENARIO 2 IAT: Std dev: 20 min 1 min SCENARIO 3 QUIZ QUESTIONS 0 Direct Labor Content: Unit Revenue: 68.0 minutes 68.0 minutes $50 $30 68.0 minutes $42 RUN: time std dev 17.0 14.0 time std dev time std dev time std dev min min min min 17.0 14.0 17.0 14.0 17.0 14.0 RERUN: 17.0 1.0 policy 17.0 1.0 policy 17.0 1.0 policy 17.0 1.0 policy RAP: 17.0 7.0 17.0 7.0 17.0 7.0 17.0 7.0 Product Mix Processing Time RUN 50 % 17.0 RERUN 50 % RAP 0 % Average Turnaround Time: Total 12 Weeks Revenue: Credite *A work day in O boure RUN RERUN RAP Final WIP Revenue WIP 50% 50% 0% 2.00 $57,000 50% 50% 0% 6.00 $56,960 Animation Speed: 50% 50% 0% 1.00 $57,280 === I reset 0 Days, 2 Hours, 14 Minutes $57,000 2011 Wanvard Business Cabool Dublishing. Developed. astaarabin with Caria Online Circulation