Homework 2 (6 points)
- You should submit a report with your solutions to tasks 1-6 in PDF, Word, Excel or OpenOffice format. In addition, for question 6, you should submit a process model with simulation parameters (a file with extension ".bpmn"). Remember that all documents should be zipped together before submission.
This homework refers to the Disability Insurance Claims Handling process at InsureIT that you modeled in previous homework.
Tasks. Conduct the following analyses on this process:
- Value-added analysis: Identify and classify process steps in terms of their value. Provide the output of this analysis in the form of a table.
- Waste analysis: Identify wastes in this process using the "7 sources of waste" of the Toyota system. For each identified waste: (i) give a brief explanation of the waste; (ii) indicate what type of waste it is. You should identify at least 10 wastes in total, and these wastes should cover at least 5 out of the 7 sources of waste.
- Write an issue register using the data provided in the scenario. In case of missing data, you can make your own assumptions and write them down in the issue register. The issue register should only include issues that affect the customer of the process. Do not include issues that affect other stakeholders (e.g. workers, managers).
- Select the most important issue in the register (according to the analysis you did in the issue register) and analyze its root causes using a why-why diagram
- Apply flow analysis to estimate the theoretical cycle time and cycle time efficiency of the process. For this question, you should consider that the process ends once the claim assessment is completed (do not include the payment nor the renewal). As part of your analysis, you should provide a table showing the processing time of each activity that you include in your theoretical cycle time calculation (as in Table 72, page 262, of the textbook). If you need to make some assumptions due to missing information, please write down your assumptions. HINT: If you think you need to know the waiting time or total cycle time of an activity in the process, we recommend reading the scenario carefully. You will discover that you don't need this information, after all...
- Run a simulation taking into account the additional information and instructions given below. In your report, please indicate the cycle time of the process (counting only business hours) under two scenarios: the scenario described below, and the scenario where there is only one senior claims handler (instead of two as below). You only need to submit one BPMN file (the one containing the scenario with two senior claims handlers for example).
- You should simulate only the part of the process from the moment a new claim is received to the moment a decision is made on the claim (i.e. until the claim is rejected or the benefit entitlement is recorded). Tasks performed by the finance officer and tasks associated to benefit renewals should not be included.
- The insurance company employs two junior claim handlers and two senior claim handlers dedicated to disability insurance. Each of them spends on average 5 hours per day on claims handling. The remaining working time is spent on other tasks not relevant to this process (e.g. professional development). You may assume that a claims handler works on handling new claims from 9:00am to a certain time of the day (that you need to calculate).
- You may assume that the insurance claims arrive according to an exponential distribution during business days only. You may also assume that there are 250 business days in a year.
- In case you need to assume that the execution time of a task follows a normal distribution, please set the standard deviation to 10% of the mean processing time.
- Your simulation should cover a period of at least seven weeks.
- The hourly cost of a senior claims handler is 40, while the cost of a junior is 25. There are no additional costs associated to a task other than the cost associated to the resource performing the task.
In case you need to make additional assumptions, please write them down in a short report and submit it together with the simulation model.
Hints for the simulation
- The time spent waiting for a customer authorization letter or for a health provider report can be modeled as a "receive" task assigned to a special resource called "System". There should be a sufficiently large number of instances of the "System" resource to ensure there is always one "System" resource available. We can assume that this "System" resource does not have any associated cost. But you can instead use events for this and it might be simpler.
- Note that a junior claims handler spends a certain amount of time per day dealing with customer inquiries as explained in the description of the process. Rather than including such "enquiry handling" tasks in the process model, you may exclude enquiries from the simulation and instead subtract the time that a junior claims handler spends handling enquiries, from their daily working timetable. Similarly, senior claims handlers spend some time handling benefit renewal requests, which should not be included in the simulation. You might wish to subtract time spent on renewals from the senior claims handlers' timetable.
- You might need to define a separate timetable for junior and for senior claims handlers, since for junior and senior claims handler spend different amount of hours per week dealing with new claims.
- It is strongly recommended that you do not try to simulate the entire process in a single go. Start with a small fragment of a process, add all data necessary to simulate that fragment, run the simulation and then incrementally extend it.
- There are 20% of short-term claims and 80% of long-term ones. You should use a variable in the simulation model to capture the fact that a claim may be of type "short-term" or "long-term".