The company has official priorities with respect to turn around time and processing order of insurance policies. Officially, the company policy is to use a first-in-first-out (FIFO) system to process policy requests. However, these priority rules are not followed. In practice, new policy requests are given priority over existing policies. The employee compensation plan does not support FIFO, due to the 25% commission paid on new policies. The turnaround and scheduling time calculations are skewed to use an exceptionally high 95% of worst case Standard Completion Time (SCT) to determine the average processing time. The combination of these factors has created a situation where product priorities and scheduling inaccuracies are causing Manzana to be unable to meet company production and profitability goals.
2.
From the analysis, there is no bottleneck resource, however, Underwriting Team #1 is operating at the highest capacity. When the data in Exhibit 6 is analyzed, it is obvious that there was been a dramatic increase in the number of lost renewals beginning in 1990. This is a result of the 1990 underwriting department reorganization, specifically, the assigning of agents to specific underwriting teams. Exhibit 7 reveals the nature of the problem: individual underwriting departments can have too many policies to process if the assigned territory is has a high number of policy request, while the other underwriting teams may have excess capacity. Additionally, in Exhibit 3, the calculations indicate the total TAT as 8.2 days, but this assumes that the downstream