Wells Fargo has adopted lean philosophy for its document management team that provides paper imaging, electronic document routing, fata lifting, and document storage services to the the Home and Consumer Finance division. One function area of the document management team is paper imaging, which enables Wells Fargo to store information electronically. When loan documents arrive, the paper are first prepared, then scanned, then sent to validation. If everything is correct, the packages are reconstructed and then loaded to cart for off-site; if mistakes are found during validation, the packages are sent back to the preparation stage to start all over again. For each loan document, the preparation activity takes 227 seconds, while the scan, the validation, and the reconstruction each takes 55 seconds. 5 Employees are assigned to the preparation activity, while 1 employee is assigned to the other three activities.
a.Assume that all the documents will pass the validation stage and no documents are sent back to the preparation stage, what is the bottleneck? What is the hourly capacity?
From what I gather the capacity for preparation activity would be 227 seconds/5 employees = 45.4 unit/sec or 45.4 x 60 minutes = 2724 units/hour
The capacity for the scan, the validation, and the reconstruction activity each would be 55seconds/1 employee = 55 unit/sec or 55 x 60minutes=3300 units/hour
I gather the bottleneck would be the scan, the validation, and the reconstruction activities.
Are my answers correct?
b.Assume that 99% of the documents will pass the validation stage and 1% of the documents will need to be sent back to the preparation stage one and only once, what is the bottleneck? What is the hourly capacity?
Note: I don’t know how to do this.
a.
There are 5 employees for the preparation which takes 227 seconds for each unit.
Therefore average of 227/5=45.4 seconds to produce each unit is correct.
For hourly production, we divide the numbers of seconds per hour by the time it takes for each unit to get the number of units:
(60 sec./min. * 60 min/hour) / 45.4 sec/unit
= 3600/45.4 units/hour
= 79.2 units/hour
For validation, it is a similar calculation:
(3600 sec/hour)/55 sec/unit
= 65.45 units/hour
I'm sure you can figure out where the bottleneck would be.
b.
So preparation will have an extra workload of 1%, and the number of units completed per hour would be 79.2*(100/101)=78.4
a. Your calculations for the capacity of each activity and the bottleneck are correct. The bottleneck is indeed the scan, validation, and reconstruction activities, as their capacity (3300 units/hour) is higher than the capacity of the preparation activity (2724 units/hour).
b. To determine the bottleneck and hourly capacity when 1% of the documents need to be sent back to the preparation stage, you need to take into account the additional time for rework.
Let's break it down:
- Preparation activity: 227 seconds/document * 5 employees = 1135 seconds/employee
- Scan, validation, and reconstruction activities: 55 seconds/document * 1 employee = 55 seconds/employee
Now, since 1% of the documents (0.01) need to be sent back to the preparation stage, we can calculate the time for rework as follows:
Rework time = 1135 seconds/employee * 0.01 = 11.35 seconds/employee
Therefore, the total time for the scan, validation, reconstruction, and rework activities becomes:
Total time = 55 seconds/employee + 11.35 seconds/employee = 66.35 seconds/employee
To determine the hourly capacity, we can calculate the units per hour for each activity:
- Preparation activity: 3600 seconds/hour / 1135 seconds/employee = 3.17 units/employee/hour
- Scan, validation, and reconstruction activities (including rework): 3600 seconds/hour / 66.35 seconds/employee = 54.22 units/employee/hour
The bottleneck is still the scan, validation, and reconstruction activities, as their capacity (54.22 units/employee/hour) is higher than the capacity of the preparation activity (3.17 units/employee/hour).
Please note that the above calculations assume that rework can be performed by the same employee who originally prepared the document. If this is not the case, the calculation may vary.