Process Flow:

All the requests of RUN, RAP or RAP are received through an agent. Distribution clerk receives the request from the agent and he logs all the incoming requests into a computer for future retrieval. Distribution is also responsible for analysing and disseminating data published each month by state insurance commissioner, researching and verifying insurance rates quoted by local competitors and overseeing the rating operations. Then each request is passed to its assigned to underwriting team whose responsibility is to evaluate, select, classify and price the policy. After review and classification the request is passed to underwriting team which calculates the premiums. Then the requests are transferred to Policy writing Department where actual typing, assembly, and distribution takes place.

However for the RAP, the transfer to the policy writing is not automatic. After rating the RAP is returned to distribution clerk, who was responsible for sending price quote to originating agent. Most quotes were accepted or rejected within 10 days. If the quote is accepted, it becomes RUN and same process continues.

Process Flow Diagram

We can identify the number of requests received by each team from the data given in Exhibit 7.

No. of Requests = (No. of RUNS + No. of RAPS + No. of RAINs + No. of RERUNs)/ (20 days *6)

Total No. of requests received by the Fruitvale branch in a day = 39

Underwriting Team 1

No of Requests in a day (1991) = (162 + 761 + 196 + 636) / (120)

= 14.625

Underwriting Team 2

No of Requests in a day (1991) = (100 + 513 + 125 + 840) / (120)

= 13.15

Underwriting Team 3

No of Requests in a day (1991) = (88 + 524 + 130 + 605) / (120)

= 11.225

From Exhibit 7,

No. of RAPs in a day (1991) = (1798/120)

= 15

According to the case only 15% are converted for policy writing.

No of request for policy writing in a day = 0.15 * 15

= 2.3

Although 24 requests i: e (39-15) are directly send for policy writing.

No of requests received by policy writing department in a day = 2.3 + 24

= 26.3

Process Flow Diagram with No. of requests in each department in a day

Currently Fruitvale branch is using 95% Standard Completion time for calculating turnaround time.

Capacity UtilizationUsing Mean Time (From Exhibit 4)

Distribution & Review(In Mins)

Under Writing(In Mins)

Ratings(In Mins)

Policy Writing(In Mins)

Total mins

No. of policies in 1990

No. of man hours

RUNs 68.5 43.6 75.5 71 258.6 678 2922.18RAPs 50 38 64.7 0 152.7 3079 7836.05RAINs 43.5 22.6 65.5 54 185.6 895 2768.53RERUNs 28 18.7 75.5 50.1 172.3 4987 14321Total No. of man hours 27847.77Max Total No. of man hours (20*7.5*20*12) 36000Capacity Utilization (Total No. of man hours / Max Total No. of man hours) 77.3%

Using 95% SCT (From Exhibit 4)Distribution & Review(In Mins

Under Writing(In Mins)

Ratings(In Mins)

Ratings(In Mins)

Total mins

No. of policies in 1990

No. of man hours

RUNs 128.1 107.2 112.3 89.3 436.9 678 4936.97RAPs 107.8 87.5 88.7 0 284 3079 14573.93RAINs 68.1 49.4 89.4 72.1 279 895 4161.75RERUNs 43.2 62.8 92.2 67 265.2 4987 22042.54Total No. of man hours 45715.19Max Total No. of man hours (20*7.5*20*12) 36000Capacity Utilization (Total No. of man hours / Max Total No. of man hours) 126.9%

When we calculated the capacity utilization using both the standard completion time and mean time

we can see that using 95% SCT, the capacity utilisation is 126.9 %, which is not possible. So another

way to approach is use of Mean processing time rather than 95% SCT. Using the mean processing

the capacity utilization is 77.3%.

Capacity utilization of each Department

Distribution & review

Underwriting Rating Policy writing

Weighted avg. processing time per request (Mins)

41.0 28.4 70.4 54.8

No. of Employees 4 3 8 5Avg. working hours per employee

7.5 7.5 7.5 7.5

Total capacity(60*Avg. working hours * No of employees )/Avg. request time

43.9 47.5 51.4 41.06

Total requests in a day 39 39 39 26.3Capacity utilization (Total requests per day / Total capacity)

88.8% 82.1% 75.8% 64%

Capacity utilization of underwriting teams located in three different Territories.

Under Writing Territory 1 Territory 2 Territory 3Weighted avg. processing time per request (Mins)

28.4 28.4 28.4

No. of Employees 1 1 1Avg. working hours per employee 7.5 7.5 7.5Total capacity(60*Avg. working hours * No of employees )/Avg. request time

15.8 15.8 15.8

Total requests per day 14.625 13.15 11.225Capacity utilization (Total requests per day / Total capacity)

92.3% 83% 70.8%