Concept explainers
Mutual Insurance Company of Iowa
Mutual Insurance Company of Iowa (MICI) has a major insurance office facility located in Des Moines, Iowa. The Des Moines office is responsible for processing all of MICI’s insurance claims for the entire nation. The company's sales have experienced rapid growth during the last year, and as expected, record levels in claims followed. Over 2,500 forms for claims a day are now flowing into the office for processing. Unfortunately, fewer than 2,500 forms a day are flowing out. The total time to process a claim, from the time it arrives to the time a check is mailed, has increased from 10 days to 10 weeks. As a result, some customers are threatening legal action. Sally Cook, the manager of Claims Processing, is particularly distressed, as she knows that a claim seldom requires more than 3 hours of actual work. Under the current administrative procedures, human resources [imitations, and facility constraints, there appear to be no easy fixes for the problem. But clearly, something must be done, as the workload has overwhelmed the existing system.
MICI management wants aggressive, but economical, action taken to fix the problem. Ms, Cook has decided to try a JIT approach to claim processing. With support from her bosses, and as a temporary fix, Cook has brought in part-time personnel from MICI sales divisions across the country to help. They are to work down the claims backlog while a new JIT system is installed.
Meanwhile, Claims Processing managers and employees are to be trained In JIT principles. With JIT principles firmly in mind, managers will redesign jobs to move responsibilities for quality control activities to each employee, holding them responsible for quality work and any necessary corrections. Cook will also initiate worker-training programs that explain the entire claim processing flow, as well as provide comprehensive training on each step in the process. Data-entry skills will also be taught to both employees and managers in an effort to fix responsibility for data accuracy on the processor rather than on data entry clerks. Additionally, cross-training will be emphasized to enable workers within departments to process a variety of customer claim applications in their entirety,
Cook and her supervisors are also reexamining the insurance and claim forms currently in use. They want to see if standardization of forms will cut processing time, reduce data-entry time, and cut work-in-process.
They hope the changes will also save training time. Making changes in work methods and worker skills leads logically to a need for change in the layout of the Claims Processing Department. This potential change represents a major move from the departmental layout of the past and will be a costly step. To help ensure the successful implementation of this phase of the changeover, Cook established a team made up of supervisors, employees, and an outside office layout consultant. She also had the team visit the Kawasaki motorcycle plant in Lincoln, Nebraska, to observe their use of work cells to aid JIT.
The team concluded that a change in the office facilities was necessary to successfully implement and integrate JIT concepts at MICI. The team believes it should revise the layout of the operation and work methods to bring them in line with “group technology cell” layouts. An example of the current departmental layout and claim processing flow pattern is presented in Figure 16.9 (on page 646). As can be seen in this figure, customer claims arrive for processing at the facility and flow through a series of offices and departments to eventually complete the claim process. Although the arrangement of the offices and workers in Figure 16.9 is typical, the entire facility actually operates 20 additional flows, each consisting of the same three departments. However, not all of the 20 flows are configured the same. The number of employees, for example, varies depending on the claim form requirements (larger claims have to be approved by more people). So while all forms must pass through the same three departments (Customer Claim Entry, Accounting, and Customer Claim Approval), the number of workers for each claim may vary from two to four. For this reason, the MICI facility currently maintains a staff of over 180 office workers just to process and route claims. All these people work for Ms. Cook.
1. Identify the attributes you would expect the Claims Processing Department at MICI to have once the new JIT system is in place.
Want to see the full answer?
Check out a sample textbook solutionChapter 16 Solutions
Operations Management
- Complaint letter address to: Mr. Billy Richards, Manager BRS Bakeshop, Estrada Subd. Greenhills San Juan Complaints are: late delivery, wrong color of cakes, only 50 cupcakes delivered ( actual order, 100 pcs.) Please use the full block format.arrow_forwardQuestion 15 Discontinuity created by new technology a.shows the amount of effort required to measure new technology B.shows the gap between the old technology and new technology C.shows the amount of capital required to implement new technology D.shows the amount of effort required to use old technology QUESITON 16 Quantity discount model is an inventory management model where A.The cost per unit decreases as production quantities increase B.Used to determine the optimal order quantity C.The price per unit decreases as order quantities decrease D.Used to determine the economic order quantity Question 17 In strategy formulation, which of the following processes answers the question "How will the firm compete"? A.Deploying the strategy B. Defining the primary tasks C.Positioning the frm D.Determining the order winners and order qualifersarrow_forwardPls answer on questionsarrow_forward
- Question 23 Company A carries 5,000 items. Customers ordered 1,000 items from inventory last week. Company A was able to fulfill 600 items of the order. What is the stock out probability for last week? Group of answer choices 0.08 0.4 0.6 0.92arrow_forwardImplement the daily life example on three versions of Max-Min inventory control system.arrow_forwardquestion 5 At Dot Com, a large retailer of popular books, demand is constant at 20,400 books per year. The cost of placing an order to replenish stock is $75, and the annual cost of holding is $6.00 per book. Stock is received 12 working days after an order has been placed. No backordering is allowed. Assume 325 working days a year. a. Dot Com's optimal order quantity is______ books. (Enter your response rounded to the nearest whole number.) b. The optimal number of orders per year is_____ orders. (Enter your response rounded to the nearest whole number.) c. The optimal interval (in working days) between orders is____ days. (Enter your response rounded to one decimal place.) d. The demand during lead time is ______ books. (Enter your response rounded to the nearest whole number.) e. The reorder point is _____ books. (Enter your response rounded to the nearest whole number.) f. The inventory position immediately after an order has been placed is _______ books.…arrow_forward
- QUESTION 3Warehousing is an important contributor to both productivity management and quality in a manufacturing industry. (a) Discuss symptoms of inefficient material handling in a warehouse.The following information is provided; Stock keeping unit(SKU) | Number of PalletsSKU 010 4 SKU 020 6 SKU 030 14 SKU 040 8 SKU 050 5 The pallets are being stored 3 high. Calculate: i. The number of pallet positions required to store the full consignment? ii. The percentage space utilisation in this warehouse.arrow_forwardThe Johnsons are celebrating their honeymoon at your hotel and have the honeymoon suite with turndown service. Mrs. Johnson has just ordered a bottle of champagne to be delivered tonight. This order will earn additional revenue for which of the following? Question 8 options: a) Banquets b) Room service c) Beverage sales d) Food salesarrow_forwardQuestion No 2: Parker Hi-Fi Systems, located in Wellesley, Massachusetts, a Boston suburb, assembles and sells the very finest home theater systems. The systems are assembled with components from the best manufacturers worldwide. Although most of the components are procured from wholesalers on the East Coast, some critical items, such as LCD screens, come directly from their manufacturer. For instance, the LCD screens are shipped via air from Foxy, Ltd., in Taiwan, to Boston’s Logan airport, and the top-of-the-line speakers are purchased from the world-renowned U.S. manufacturer Boss. Parker’s purchasing agent, Raktim Pal, submits an order release for LCD screens once every 4 weeks. The company’s annual requirements total 500 units (2 per working day), and Parker’s per unit cost is $1,500. (Because of Parker’s relatively low volume and the quality focus—rather than volume focus— of many of Parker’s suppliers, Parker is seldom able to obtain quantity discounts.) Because Foxy promises…arrow_forward
- Define INVENTORY CONTROL?arrow_forwardTime interval between consecuitive order placements ( assume 300 working days)arrow_forwardQuestion A3 Which of the following is not one of the four key characteristics that make management accounting information useful? A Comparability B Relevance C Precision D Reliabilityarrow_forward
- Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,Operations ManagementOperations ManagementISBN:9781259667473Author:William J StevensonPublisher:McGraw-Hill EducationOperations and Supply Chain Management (Mcgraw-hi...Operations ManagementISBN:9781259666100Author:F. Robert Jacobs, Richard B ChasePublisher:McGraw-Hill Education
- Purchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage LearningProduction and Operations Analysis, Seventh Editi...Operations ManagementISBN:9781478623069Author:Steven Nahmias, Tava Lennon OlsenPublisher:Waveland Press, Inc.