Question

Auto-Moto receives about 800 loan applications per month (30working days). All applications go through an Initial Review sub-process, where the applications are then classified as A (looks excellent), B (needs more detailed evaluation), and C (reject summarily). A and B applications would be forwarded to sub-processes A and B, respectively. On average, 10% of all applications go through Sub-process A, 30% go through sub-process B, and the rest are rejected. On average, 70% of applications in sub-process A, and 30% of applications in sub-process B are accepted and the rest are rejected. (Recall that all Cs were rejected. ) On average 180 applications are in the Initial Review sub-process, 60 are in sub-process A, and 60 applications are in sub-process B.

1. What is the average flow time of an application? The potential answers are:______.

2. How many applications are rejected per month? The potential answers are:______.

3. Compute the average flow time at Initial Review sub-process. The potential answers are:________

Answer 1

1. The average flow rate of an application is 11.3 days.

2. The number of applications that are rejected is 672.

3. The average flow time at Initial Review sub-process is 6.75 days

1.  What is the average flow time of an application?

R = 800

I = inventory

= 180 + 60 + 60

= 300

I/R = 300/800

= 0.375 month * 30 days

= 11.3 days

2.  How many applications are rejected per month?

The applications entering for A:

10 % of 800 = 80

The applications entering for B:

30% of 800 = 240

This shows that 60% are rejected

0.6 * 800 = 480

70% in A are accepted, so 30% x 80 = 24 are rejected for A

30% in B are accepted, so 70% x 240 = 168 are rejected for B.

Total number of rejected applications are 24 + 168 + 480

= 672

3. The average flow time at Initial Review sub-process

= I/R

I = 180

R = 800

180/800

= 6.75 days

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