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# Increase the number of claims processors from 12 to 14. What is the impact on available minutes per day?

On theoretical process capacity? What are the implications? If we increase the claims processors from 12 to 14, available minutes per day will increase from 4320 to 5040 . It will have no impact on theoretical capacity since claims processors is not the bottleneck. We need to increase resources for bottleneck to increase the theoretical capacity. It will have no implication in terms or revenue , they will just increase their cost for 2 additional claim processors. 2) Suppose NewLife invests in information technologies that allow a claims supervisor to process
any claim in just 2 minutes. What is the impact on theoretical process capacity?

1)

If Information Technology reduces the time for any claim to 2 minutes from 2.2 minutes , the number of claims processed by claims supervisors will increase from 545 to 600 . It will increase the theoretical capacity to 600 since theoretical capacity is decided based on bottleneck and claims supervisors still remains the bottleneck at 600 claims. So overall theoretical process capacity will increase from 545 to 600 . 3) Assume NewLife is experiencing an actual demand of just 400 claims per day. What is the
utilization level for the claims supervisors? If demand is expected to remain at 400, is there any benefit in NewLife adding new resources or shuffling the resource pools? Why or why not?

If the actual demand is just 400 claims per day , the utilization level for claims supervisors would be 73.3 % . Total minutes used :- 400*2.2 = 880 minutes Total capacity :- 1200 minutes utilization level :- 880/1200 = 73.3 % If the demand remains same , there is no point in adding more resources since the maximum utilization for any resource pool is 73.3% , other resource pools are even less utilized. There is no point in shuffling resource pool as well since there is no resource group which is over capacity and need resources. It will just add extra cost for adding or reshuffling, no benefit on revenue side.
4) 3 claims processors quit. Is this a problem? Why or why not?

If 3 claims processors quit , the number of claims processors will go from 12 to 9 and the total capacity will be 3240 minutes instead of 4320 minutes. It will become the bottleneck and can only serve 490.9 claims per day. So, we think this will be a problem.
5) What would be the impact on the process theoretical capacity if NewLife eliminated the claims supervisors step altogether? What do you think the business implications are of doing this?

If we remove the claims supervisor step all together, then the next bottleneck will be claims processors. Claims processors can serve 655 claims. So, it will increase the revenue from 5450 to 6550 . So, there would be additional revenue of 1100 dollars.
6) Suppose physicians claims and hospital claims both take 2.2 minutes. Under these conditions, what is the optimum product mix? What is meant by optimum here?

The optimum product mix is 239 physicians claim and 307 hospital claim. It will bring in revenue of 6,222 which is greater than 5450 coming earlier. We have increased this revenue without adding or

reshuffling any resources. So, by optimum here we mean that we have improved the process by increasing utilization rate of resources and increasing the revenue by not adding any extra resource.