Question

Boring Inc., a small but established accounting firm, finds increasing demand for its services but is apprehensive that that it may not be able to deliver on its promises to its clients. As usual, you (O.M. Inc.) are called to analyze, diagnose and fix the problem.

Here are the facts as dug out by you.

4 types of clients come to Boring Inc.

Type 1: New clients, simple returns = 15% of total clients (returns)

Type 2: New clients, complex returns = 5%

Type 3: Old clients, simple returns = 50%

Type 4: Old clients, complex returns = 30%

On average, 50 returns (clients) are received by the firm every month – the client type distribution follows the pattern described earlier (15%, 5%, 50%, 30% - use fractions/decimal values as needed).

The returns preparation and filing process consists of the following steps:

                     (Clerk)             (Sr. Account.)     (Jr. Account)       (Sr. Account)              (Same Clerk)

Client           Receiving         Initial                  Preparation     Review by                     Writing

Type                                      Meeting             of draft                    Sr.accountant

1                  20 min/client    30 min/client      120 min/client      20 min/client               50 min/client   

2                  40                      90                          300                       60                                   80

3                  20                      0                        80                        5                                    30

4                  40                      0                       200                         30                                    60

Boring Inc. has just 3 work personnel. Receiving and writing for a client are both performed by the clerk. The initial meeting and review is conducted by the senior accountant. The preparation is done by the junior accountant. Each person works 8 hour days, 20 days a month.

Find the bottleneck, current or potential. What is her current implied utilization %?

A template is provided below for your guidance.

Resource	Available Capacity Total Minutes/Month	Type 1 Client Requested Capacity	Type 2 Client Requested Capacity	Type 3 Client Requested Capacity	Type 4 Client Requested Capacity	Total Requested Capacity (min)	Implied utilization
Clerk
Senior
Junior

Implied utilization = Total Requested capacity / Available capacity

     Requested capacity: # returns of a type * minutes reqd. to process the return

Hint: Note that ‘Client Requested Capacity’ = Total capacity needed by that particular resource to service all the clients of that Type.

For e.g.

For the Clerk -

Total Requested Capacity (in min) by Type 1 Client = (# of Type 1 clients * # of min/Type1 client).      

                                                                                                     

Answer 1

Resource	Available capacity in minutes/month	Type-1 Clent Requested capacity	Type-2 Clent Requested capacity	Type-3 Clent Requested capacity	Type-4 Clent Requested capacity	Total Requested capacity	Implied utilization
Clerk	9600	525	300	1250	1500	3575	37.2%
Senior	9600	375	375	125	450	1325	13.8%
Junior	9600	900	750	2000	3000	6650	69.3%
	Flow per month	7.5	2.5	25	15	50

So,

The junior accountant is the bottleneck and her implied utilization is 69.3%

Calculations: