Suppose that the manager of a loan-processing department wants to know how many employees will be needed
Question:
Suppose that the manager of a loan-processing department wants to know how many employees will be needed over the next several months to process a certain number of loan files per month so she can better plan capacity. Let’s also suppose that there are different types of products that require processing. A product could be a 30-year fixed rate mortgage, a 7/1 ARM, an FHA loan, or a construction loan. Each of these loan types vary in their complexity, require different levels of documentation, and, consequently, have different times to complete. Assume that the manager forecasts 700 loan applications in May, 750 in June, 800 in July, and 825 in August. Each employee works productively for 6.5 hours each day, and there are 22 working days in May, 20 in June, 22 in July, and 22 in August. The manager also knows, based on historical loan data, the percentage of each product type and how long it takes to process one loan of each type. These data are as follows:
Product | Product Mix (%) | Hours Per File |
---|---|---|
Product 1 | 22 | 3.50 |
Product 2 | 17 | 2.00 |
Product 3 | 13 | 1.50 |
Product 4 | 12 | 5.50 |
Product 5 | 9 | 4.00 |
Product 6 | 9 | 3.00 |
Product 7 | 6 | 2.00 |
Product 8 | 5 | 2.00 |
Product 9 | 3 | 1.50 |
Product 10 | 1 | 3.50 |
Miscellaneous | 3 | 3.00 |
Total | 100 |
The manager would like to determine the number of full-time equivalent (FTE) staff needed each month to ensure that all loans can be processed.